Wed, April 03, 2024 at 16:17

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    Kang-hoon

    • Hello Annie, today's news is about the Federal Reserve Chair Jay Powell's recent comments on inflation and interest rates.

    • He reiterated his belief that inflation is on a 'bumpy' path down to 2% and that central bank officials expect to lower rates at 'some point' this year.

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  • Annie

    • Oh, really?😮 That's interesting.

    • So, what does this mean for the economy?

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    Kang-hoon

    • Well, Powell's comments suggest that despite some hotter-than-expected inflation readings at the start of the year, the overall outlook hasn't changed much.

    • He emphasized that such data do not 'materially change the overall picture,' which he described as one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2 percent.

  • Annie

    • Hmm...so the inflation isn't as bad as some people thought?🤔

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  • ADward

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    Kang-hoon

    • That's correct.

    • The Fed's preferred inflation gauge, the Personal Consumption Expenditures index, showed a slight cooling last Friday.

    • This was in line with what the Fed wants to see.

  • Annie

    • I see.

    • And what about the interest rates?

    • Are they going to be lowered soon?

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    Kang-hoon

    • Powell did predict cuts this year, but he also said it's 'too soon' to determine whether the hot readings on inflation are more than just a 'bump.'

    • He reiterated that officials don't expect to lower rates until they gain more confidence inflation is decisively dropping to 2%.

  • Annie

    • Got it.

    • So, they're waiting to see how things go before making a decision?

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    Kang-hoon

    • Exactly.

    • Powell emphasized that given the strength of the economy and progress on inflation so far, they have time to let the incoming data guide their decisions on policy.

  • Annie

    • Makes sense.

    • But what about the political pressure?

    • I heard there's a lot of that going on.😕

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    Kang-hoon

    • Yes, there is.

    • Both Democrats and Republicans are trying to influence Powell and the Fed as the November election draws closer.

    • Democrats tend to want cuts as soon as possible, while Republicans generally want Powell to take it slow.

  • Annie

    • And how is Powell responding to all this?

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    Kang-hoon

    • Powell has made it clear that the Fed's decisions are not swayed by elections.

    • He said, 'Fed policymakers serve long terms that are not synchronized with election cycles.

    • This independence both enables and requires us to make our monetary policy decisions without consideration of short-term political matters.'

  • Annie

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

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    Kang-hoon

    • In my opinion, this news might be seen as negative for the market.

    • The uncertainty around interest rate cuts and inflation could lead to volatility in the market.

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    • Also, if the Fed decides to delay rate cuts, it could affect borrowing costs and slow down economic activity.

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