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"We need more confidence in falling inflation before we can cut interest rates." Many Fed officials are "hawking"

Release Time:2024-02-23

Fed officials have voiced intensively, warning that there are risks in cutting interest rates too quickly.

On Thursday, February 22nd, local time, Lisa Cook, the governor of the Federal Reserve, said at the Macrofinance Conference of Princeton University, "Before starting to cut interest rates, I hope to have more confidence that the inflation rate is approaching 2%. I think the final interest rate cut is to adjust the policy to reflect the changes in the risk balance. "

Cook said that the risks faced by the Fed to achieve the dual goals of price stability and maximum employment are now more balanced, rather than being more inclined to inflation as in the past few years.

She also pointed out that achieving the 2% inflation target may still be a tortuous process.

"The 12-month core personal consumption expenditure (PCE) inflation rate, which converges to our 2% target over time, still seems to be a reasonable baseline outlook." She said. PCE inflation rate is the favorite inflation indicator of the Federal Reserve.

"As we receive more data, we should continue to be cautious and maintain the necessary degree of policy restrictions to sustainably restore price stability while keeping the economy on a good track." She said.

Also on Thursday, Christopher Waller, the governor of the Federal Reserve, said in a policy speech in Minneapolis that he needed to see more evidence of cooling inflation before he could support a rate cut, but he still expected to start cutting interest rates later this year.

Waller said: "The strength of the economy and the inflation data we have recently received mean that patience, caution, organization and deliberation are appropriate-choose your favorite synonym." "No matter what words you choose, they can all be translated into one meaning: What's the hurry?"

Cook and Waller's remarks echoed the recent views of several Fed officials, who suggested that although the Fed's next policy action may be to cut interest rates, the Fed is not in a hurry to start easing policies.

As mentioned in the previous article on Wall Street, Philip Jefferson, vice chairman of the Federal Reserve, said on Thursday that the Fed needs to be alert to excessive interest rate cuts due to falling inflation, so as not to undermine the ultimate goal of achieving price stability. He said:

"We always need to keep in mind the danger of excessive easing due to the improvement of inflation. Excessive easing may lead to stagnation or reversal of the process of restoring price stability. "

Patrick Harker, president of Philadelphia Federal Reserve, who did not have the right to vote at the FOMC meeting of the Federal Reserve's Monetary Policy Committee this year, also said that this year may be suitable for interest rate cuts, but stressed the risk of too fast easing, saying that too fast action may offset the progress made in inflation. "We have time to get things done." He will closely monitor the data and verify the downward trend of prices.

Just the day before the four people spoke, the Federal Reserve released the minutes of the monetary policy meeting at the end of last month on Wednesday, which wrote:

"some participants pointed out that the progress of price stability may stagnate, especially if the total demand increases or the supply-side recovery is slower than expected. Participants emphasized the uncertainty of how long the restrictive monetary policy stance needs to be maintained.

Most participants pointed out the risk of relaxing policy stance too quickly, and stressed the importance of judging whether inflation can be reduced to 2% sustainably by carefully evaluating future data. However, two (a couple of) participants pointed out that maintaining an excessively restrictive position for a long time will bring downside risks to the economy. "

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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