The Federal Reserve (Fed) will announce its December resolution at 3 a.m. Taiwan time on Thursday, the 15th. Nick Timiraos, a reporter for the Wall Street Journal (WSJ), recognized by the market as the “megaphone of the Fed,” knocked on Monday 12. A wake-up call that the Federal Reserve is facing a clash of hawks and dovish and people misjudge Fed Chairman Jerome Powell as a good guy.
Investors on Monday (12) were optimistic that the US consumer price index (CPI) for November will show US inflationary pressures are easing, prompting the Federal Reserve to slow the pace of interest rate hikes from its December meeting. Major US stock indexes rose more than 1% across the board on Monday.
However, during the quiet period before the December Federal Open Market Committee (FOMC) meeting, “Wall Street Journal” (WSJ) reporter Nick Timiraos revealed on Monday that there is a dovish and bullshit situation at the Federal Reserve. challenges, including “how high the final rate of this rate hike cycle will be and how long interest rates will be held at this level to curb inflation.”
At present, the Federal Reserve is splitting into two camps, the hawks and the doves, each with its own stand.
Doves like Patrick Harker, chairman of the Federal Reserve Bank of Philadelphia, and Susan Collins, chairman of the Federal Reserve Bank of Boston, fear the Fed has hiked interest rates sharply this year, leaving no time to assess the impact of interest rates rate hikes on the economy and worried about the dangers of an economic recession.
Hawks fear that cutting interest rates prematurely will lead to a repeat of the policy mistakes of the 1970s. Hawks like Fed Chairman Jerome Powell and Governor Christopher Waller fear a resurgence of the wage and price spiral nightmare. Kansas City Federal Reserve Bank President Esther George even bluntly stated that inflation is unlikely to be brought down without a recession.
At the same time, Timiraos also said that Powell has repeatedly said he is more concerned about the risk of “not doing enough” to fight inflation than the risk of doing too much, and that the Fed is trying to strike a balance to avoid “useless” economic pains.
Timiraos also singled out Minneapolis Fed Chairman Neel Kashkari.
Kashkari was once a representative of the doves, but now he voted for the hawks. “When a recession is triggered by the Fed’s tight monetary policy to curb inflation, the economy can recover very quickly,” Kashkari said in October.
Timiraos quoted Citigroup chief global economist Nathan Sheets as saying all Fed officials expect the unemployment rate to rise, which could lead to a wider divergence in terminal interest rates.
Confronted with the Federal Reserve’s current internal polarization, how will Powell react? Timiraos tweeted: “People are really misjudging Bauer as a diplomat, a real nice guy, a mediator, but that is absolutely not the case. Bauer will have a very clear point of view and is committed to What the law requires, which is a lower inflation.”
Timiraos believes Powell tends to slow the pace of interest rate hikes and wait for the fallout from a large rate hike to unfold. The Fed to raise the terminal interest rate to about 5% before March next year, and then keep it at a low level. high level for a longer period of time It will not be too soon Switch to easing policies. If the Fed believes that the economic slowdown is not enough to reduce inflation sufficiently, the Fed will continue to raise interest rates at the traditional rate of 1 yard at a time.
