Sun, June 30, 2024 at 11:27

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I have some important news regarding the Federal Reserve's stance on interest rates and inflation.

  • 
• Annie

  • Oh, that sounds crucial!

  • What did they say?😊

  
• 

  Kang-hoon

  • San Francisco Fed President Mary Daly mentioned in a CNBC interview that it's premature to talk about rate cuts.

  • She emphasized that while we're seeing slowing growth, spending, and hiring, inflation is still too high relative to the Fed's 2% target.

• Annie

  • So, they're not planning to cut rates anytime soon?😕

  
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• 

  Kang-hoon

  • Exactly.

  • Daly pointed out that the time it takes for monetary policy to moderate inflation is longer than they would like.

  • This suggests that the current policy might not be as effective as hoped.

• Annie

  • Interesting.

  • What about the PCE price index?

  • I heard it was released today.

  
• 

  Kang-hoon

  • Yes, the PCE price index, which measures prices paid by U.S. residents for goods and services, rose 2.6% in May compared to the same month last year.

  • This was in line with market expectations.

• Annie

  • So, it's still above their target.

  • What did Richmond Fed President Thomas Barkin say about this?

  
• 

  Kang-hoon

  • Barkin, speaking at a conference at the French central bank, echoed Daly's sentiments.

  • He stated that the fight against inflation is far from over and that the effects of rate hikes will eventually slow the economy.

• Annie

  • Did he mention anything about the timing of rate cuts?🤔

  
• 

  Kang-hoon

  • He was quite cautious on that front.

  • Barkin said it's not the right time to give preemptive guidance on rate cuts.

  • He suggested that the neutral rate might be higher and that monetary policy might not be as restrictive as they think.

• Annie

  • So, they are being very careful.

  • What does this mean for the upcoming FOMC meeting?

  
• 

  Kang-hoon

  • The Fed will hold its Federal Open Market Committee (FOMC) monetary policy meeting next month on March 30-31 to decide on interest rates.

  • Given the current stance, it seems unlikely they will cut rates.

• Annie

  • Got it.

  • So, overall, is this news good or bad for the market?📉📈

  
• 

  Kang-hoon

  • In the short term, this is bad news for the market.

  • 

  • The reluctance to cut rates suggests that the Fed is still very concerned about inflation, which could mean tighter monetary policy for longer.

  • This could negatively impact economic growth and market sentiment.

• Annie

  • Thank you, Kang-hoon.

  • That was very insightful.

  • I'll keep this in mind for my investment decisions.👋

  
• 

  Kang-hoon

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.