[Powell: A December rate cut is not set in stone, government 'shutdown' will impact economic activity] According to reports from Cailian Press, Federal Reserve Chairman Powell mentioned at a press conference that the market's expectation of another rate cut in December is 'far from certain'—a statement that dealt a heavy blow to risk assets being traded. Powell stated that current data indicates little change in the outlook, the economy is expanding moderately, the labor market appears to be gradually cooling, and inflation levels remain slightly elevated. 'Data prior to the (federal government) shutdown suggests the economy may be moving toward a more solid trajectory,' Powell said. He noted that the government shutdown would temporarily drag down economic activity, and existing evidence shows layoffs and hiring numbers remain low, with downside risks to employment seemingly increasing. These comments align with the resolution statement released earlier. Speaking about inflation, Powell added that the decline in service sector inflation seems to be continuing, and most indicators measuring long-term inflation expectations are consistent with the target. However, recent inflation expectations have risen, as higher tariff policies are driving up the prices of certain goods. He also acknowledged, 'Under a reasonable baseline scenario, the impact of tariffs on inflation will be temporary.' Powell emphasized the need to manage the risk of prolonged inflation, stating that the Federal Reserve has a responsibility to ensure it does not become a persistent issue and can respond promptly to economic developments. During the Q&A session, Powell stated that if data shows improvement in the labor market, it would influence decision-making. He mentioned uncertainty about what data the Federal Reserve might receive before the December meeting, and the absence of economic data could be a reason to pause rate adjustments. Regarding 'ending balance sheet reduction,' Powell noted that the Federal Reserve cannot simultaneously address employment and inflation risks with just one tool, and decisions about the balance sheet should allow the market some time to adapt. Over the past three weeks, liquidity in the money market has tightened, and continuing to reduce the balance sheet offers little benefit. Nick Timiraos, often referred to as the 'Fed whisperer,' commented that the FOMC as a whole does not agree with the market's previous high pricing of a December rate cut. This goes beyond their usual disclaimer that 'policy does not follow a predetermined path.' Timiraos believes this is a clear attempt by the Federal Reserve to regain some policy flexibility to avoid being forced into taking a specific action.