Original title: Fed fixed tone contraction table is in sight

Source: economic Information Daily

At the just-concluded annual meeting of global central banks in Jackson Hole, central bankers discussed the theme of "macroeconomic policies in an unbalanced economy". Federal Reserve Chairman Colin Powell said the balance sheet would be reduced by the end of the year, but interest rate increases would not be considered in the near future.

Powell did not give a clear timing and speed of contraction, which means that the Federal Reserve in the US economy ZTO ExpressInflation and employment, two seriously conflicting economic indicators, are still weighing the best time to act, and Powell stressed once again that raising interest rates is still a relatively distant goal, and market sentiment has clearly been relaxed. U. S. stocks rose, the dollar index fell and gold rose above $1800 an ounce.

In fact, the timing for the Fed to shrink its schedule is getting closer and closer than it was a few months ago.

Many Fed officials have become more urgent about shrinking the table in public. The price index of the United States reached the target in July. The core PCE price index was 3.6% in July, the second month in a row at a 30-year high. Powell has also acknowledged that the US economy has made "further substantial progress" towards the goal of price stability, and of course, he still says that inflation is only a temporary phenomenon.

From the perspective of the new monetary policy framework announced by the Fed last year, the Fed still needs to take concrete action after the employment situation has improved to a certain level. Therefore, the performance of this indicator in the future will directly affect the specific time point and speed of the Fed's shrinking table.

Judging from the current situation, there is still at least a year to go before the Fed begins the pace of tightening, and the rapid spread of the Delta strain in the United States has added to the uncertainty. In commodity markets, US natural gas futures continued to rise as Hurricane Ida threatened US oil, gas and fuel supplies, and crops around the world also suffered climate disasters, leading to recent commodity index gains.

In the past, the shift in Fed policy has had a big impact on other economies. This time, although the Fed has used reverse repurchase tools to recover dollars, the excess liquidity brought about by unlimited exposure to the market has led to a general rise in prices around the world. Some emerging economies have had to raise interest rates, and some advanced economies have begun to plan ahead to tighten monetary policy.

In the future, when the Federal Reserve really starts to raise interest rates, the "tapering panic" in other economies may abate due to preparation in advance. Instead, it is Qualcomm Inc that the Federal Reserve is facing this time.The problem of inflated and low employment is more difficult to solve than in previous crises, coupled with a narrower policy space, the Fed's policy choices will be more difficult in the future.