Overall, Powell's speech this time was quite hawkish, mainly denying the possibility of a rate cut in December. From Powell's perspective, he does not support a rate cut in December, which may be the main reason for the market downturn. Of course, Powell did not rule it out completely; if the labor market remains at risk, the probability of a rate cut by the Federal Reserve in December is still quite high.

Powell emphasized multiple times that the current unemployment rate is at 4.3%, which is a historical low. Therefore, my personal estimate is that unless the unemployment rate rises above 4.5%, the probability of a rate cut in December is indeed low. Additionally, Powell has a significant tolerance for rising inflation, believing that the current increase in goods inflation is largely due to tariffs.

The instability of tariffs is the biggest factor affecting inflation; if tariffs do not change frequently, inflation will be more stable. Moreover, non-tariff inflation is now very close to 2%, and its impact on inflation is not very significant. The focus remains on the labor market.

Powell may have realized that during his last visit he mentioned that the stock market bubble was too high, so this time, even when a reporter tried to trap him, Powell did not reiterate the statement about the stock market being "too high." However, Powell believes that consumer spending levels are greatly influenced by the stock market, and the rise in the stock market has driven consumer spending.

Furthermore, within the Federal Reserve, Powell believes there are significant divisions, with some wanting larger and faster rate cuts, while others think rate cuts should be slowed down. After all, the Federal Reserve cannot simultaneously increase employment while also addressing inflation reduction.

In this regard, the most diligent worker in Trump's camp is still Milan.

This article is sponsored by #Bitget ｜ @Bitget_zh

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