The stability of the US economy is at the core of global financial health. Therefore, for traders of all asset classes, the statement by Federal Reserve Chairman Jerome Powell is a crucial event. Powell's speeches often trigger intense speculation and debate. Currently, the following are ten popular related questions commonly raised by the public. Let's take a closer look.

What has Jerome Powell said recently?

Jerome Powell emphasized that the current battle against inflation is crucial and far from over. So, the good news is that there is no bad news That's probably it. According to official data, although previous interest rate hikes seem to be ineffective, the United States still has the ability to repay, so it is currently unclear how the situation will improve.

Will the Federal Reserve raise interest rates again?

Yes, it seems that the Federal Reserve will indeed raise interest rates throughout 2024 to address stubborn inflation. The matter of interest rate hike has not been confirmed yet, but it is almost certain. When interest rates rise, the market will experience volatility, but assuming a rate hike will benefit the US dollar.

What impact does the interest rate hike have on the US economy?

The interest rate hike aims to cool down the US economy and control inflation. The higher interest rates once attracted international investors. By selling US treasury bond, the Federal Reserve can reduce the circulation and strengthen the US dollar, but US treasury bond are not the most popular assets at present. Some countries are trying to limit the amount of US dollars held for trading.

Is the US economy heading towards recession?

The American media has been discussing how the United States avoided an economic recession. The American media may have to present an optimistic outlook, but when we traders take a step back and look at the whole picture, we will find that it is only a matter of time before the US economy exposes its true strengths or weaknesses.

How does the Federal Reserve deal with inflation?

Apart from raising interest rates and implementing quantitative tightening policies, there are no other measures. For over a year, these two measures have successfully kept the United States above a critical point, but they only address the symptoms rather than the root cause. At present, it seems that the Federal Reserve is striving to survive inflation rather than fighting against it.  

What are the risks of raising interest rates?

Raising interest rates will bring significant risks and may have adverse effects on the economy. If interest rates are too high, the Federal Reserve may trigger an economic recession that we have never seen before. The increase in borrowing costs caused by interest rate hikes may inhibit corporate investment, thereby hindering economic growth, and may even lead to rising unemployment rates, housing crises, and a comprehensive economic recession.

What are the risks of not raising interest rates?

Not raising interest rates amidst soaring inflation is like sailing a ship into a storm. The reason why the US economy can stabilize is because it artificially lowers borrowing costs, but borrowing costs will spiral upwards, causing a chaotic situation of out of control inflation and the evaporation of the value of the US dollar.

In addition, investors who still hold US treasury bond bonds may sell them, which will aggravate inflationary pressure.

What tools does the Federal Reserve have to control inflation?

At present, the Federal Reserve is still adhering to interest rate hikes and quantitative tightening policies, but Powell is facing pressure to implement new measures. Please pay attention to other measures announced by the Federal Reserve, such as fiscal policy adjustments in spending and taxation, new supply side policies, wage and price controls, and the use of macroprudential tools.  

If these comments begin to circulate in the media, some investors may turn to bearish views, believing that the Federal Reserve is losing control of the US economy. Other investors may view the new measures as a bullish signal.

What is the target inflation rate of the Federal Reserve?

The Federal Reserve's long-term target inflation rate is 2%, aimed at maintaining a stable annual increase in prices of goods and services. A 2% inflation target in 2024 may be an unrealistic benchmark, facing scrutiny from some economists who suggest reassessing the inflation target to better reflect contemporary economic challenges.

How will the actions of the Federal Reserve affect the global market?

Powell's words and actions seem to touch the nerves of the financial industry. If you expect every market to react to the Federal Reserve, then you will be right more times than wrong. Although that's the case, don't expect common causal relationships to occur. The US dollar is no longer the 'golden ticket' of the past.

Let's take a look back at Powell's recent remarks and reflect on the message he conveyed, whether he holds an optimistic or pessimistic view of the United States overall, and thenExness demo accountTrade in US dollars and test theories risk-free. Your top priority for 2024 should be to learn and explore how the US economy affects the financial ecosystem.

conclusion

Powell and the Federal Reserve are striving to maintain stability in the US economy. No matter what the media says, the US economy is still vulnerable. This year is an election year, so the media leaning towards the Democratic Party is likely to continue making positive and optimistic statements, but don't be misled by bullish rhetoric. Any wrong move by Powell could potentially plunge the United States into a downward spiral. Please include this emotion in your evaluation. Furthermore, please do not be surprised if the US data report does not have the usual impact on the market.

Always grasp the pulse of the market and be prepared to deal with large selling in the most unexpected moments, as well as the miraculous and inexplicable recovery that follows.