Points of interest at the Fed monetary policy meeting: number of interest rate cuts by the end of the year
The Federal Reserve's monetary policy meeting has attracted market attention. At this meeting, the biggest focus was on the outlook on the number of interest rate cuts within the year. Employment statistics show that the labor market is still strong, and the situation where no end to inflation is foreseeable continues. Under these circumstances, attention is being paid to what kind of monetary policy the Fed will launch.
The current state of strong labor markets and inflation
According to the May employment statistics released last Friday, the growth in the number of workers in the non-farm sector significantly exceeded market expectations. This showed that demand for labor remained strong. However, at the same time, the inflation rate continues to exceed the Fed's target of 2%, and the convergence of inflation is not clearly foreseeable. As long as inflation does not subside, I think it will be difficult for the Fed to actively cut interest rates. In the market, predictions that the Fed will leave policy interest rates unchanged for 7 consecutive meetings occupy 95% or more. Suggestions from meeting participants regarding future policy interest rate forecasts are attracting attention.
Pay attention to Chairman Powell's remarks
Chairman Powell's press conference scheduled after this meeting is also a point of interest. There is a possibility that what statements are made regarding inflation and interest rate cuts will have a major impact on the market. It showed a dovish attitude, but in the minutes that followed, it became clear that many Fed members were hawkish. It is also interesting to see how this gap is perceived by the market.
The strength of the American economy
While manufacturing indicators are weak, non-manufacturing indicators are strong. The view that the economy has begun to slow down was questioned, and the American economy remains strong. Also, fiscal policy is extremely stimulating, and the fact that current policy interest rates are not monetary tightening is also a factor supporting the strength of the American economy.
Views on education 💡
It is predicted that it is unlikely that the Fed will cut interest rates by the end of the year. However, while Chairman Powell made a dovish statement about interest rate cuts at the press conference, many members are hawkish in the minutes. The impact that differences of opinion have on the market cannot be ignored. Summary At the current Fed monetary policy meeting, attention is being paid to the extent to which interest rate cuts will be carried out by the end of the year against the backdrop of inflation conditions and a strong labor market. If the Fed does not show a forecast of interest rate cuts, it will take time to reduce the interest rate difference between the US and Japan, and there is a possibility that pressure on yen depreciation will rise again. How Chairman Powell's remarks and the views of meeting participants are received by the market is an important point that will influence future financial market trends.
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