Big jump across the board! The Fed raises interest rates suddenly! Wash speaks
Expectations for the Federal Reserve to raise interest rates have changed. On July 14 (Tuesday) local time, the U.S. Bureau of Labor Statistics released data showing that affected by the sharp plunge in energy prices, the Consumer Price Index (CPI) in June hit the largest month-on-month decline in more than six years, and the high inflation during the year was temporarily alleviated. After the data was released, traders pushed back expectations for a rate hike by the Federal Reserve until October. In the market, gold and silver have risen sharply. As of press time, London gold has risen by more than 2%, and London silver has risen by nearly 3%. International oil prices have also risen sharply. As of press time, U.S. oil has risen by more than 3%, and Brent oil has risen by more than 4%.
Expectations for the Federal Reserve to raise interest rates have changed. On July 14 (Tuesday) local time, the U.S. Bureau of Labor Statistics released data showing that affected by the sharp plunge in energy prices, the Consumer Price Index (CPI) in June hit the largest month-on-month decline in more than six years, and the high inflation during the year was temporarily alleviated. After the data was released, traders pushed back expectations for a rate hike by the Federal Reserve until October. In the market, gold and silver have risen sharply. As of press time, London gold has risen by more than 2%, and London silver has risen by nearly 3%. International oil prices have also risen sharply. As of press time, U.S. oil has risen by more than 3%, and Brent oil has risen by more than 4%. Cryptocurrencies overall strengthened, with Bitcoin rising by more than 2% and Ethereum rising by more than 6%. In addition, Federal Reserve Chairman Kevin Warsh will go to Congress for two consecutive days to attend hearings. He said that inflation would never be tolerated remaining high for a long time. CPI is the core indicator that measures the comprehensive cost of goods and services in the United States. All sub-data this time were lower than market expectations. Data show that after seasonal adjustment, the U.S. CPI fell by 0.4% month-on-month in June, and the year-on-year inflation rate fell back to 3.5%. Economists surveyed by Dow Jones had expected a fall of just 0.2% month-on-month and a year-on-year rise of 3.8%. The month-on-month decline in overall inflation this time was the largest since April 2020. After excluding volatile food and energy, the core CPI remained unchanged month-on-month, with the year-on-year increase falling to 2.6%. The market consensus is for a month-on-month increase of 0.2% and a year-on-year increase of 2.9%. In terms of categories, the energy index fell 5.7% month-on-month in June, but still rose 15.7% year-on-year; gasoline and fuel prices both fell by more than 9% month-on-month. In addition, prices for services, which Fed policymakers focus on as a proxy for long-term inflation trends, have cooled significantly. Fed Chairman takes tough stance against inflation It is worth mentioning that Wash’s latest statement also attracted attention. He will appear before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday. In his pre-prepared written speech, Warsh once again released a tough anti-inflation signal, while strongly affirming the resilience of the U.S. economy and being optimistic about the growth potential released by corporate investment, especially artificial intelligence-related investment. "We are at a turning point in history, and everyone must meet the test of this era." Wash said. He added: "The Federal Reserve's primary goal is to formulate a monetary policy that is precise and as realistic as possible. This is our consistent clear core and action guide. As long as monetary policy is adjusted in place, the surge in inflation over the past five years will eventually become history." This hearing comes only two months after Warsh officially became chairman of the Federal Reserve. The chairman of the Federal Reserve is legally required to go to Congress twice a year to submit a monetary policy report and accept questions from lawmakers. Since 2021, U.S. inflation has continued to exceed the Fed's 2% policy target, and Warsh took over the Fed, which is deeply troubled by inflation. During his confirmation hearing earlier this year, Warsh said inflation was the result of human policy choices. At his first press conference after taking office, he also repeatedly emphasized that lowering the cost of living is a core task. Similar to the views of his predecessor Powell, Warsh said that long-term high inflation has placed a heavy burden on American households and businesses, and costs have increased across all walks of life. This round of inflation is largely due to the surge in energy prices. "Monthly price fluctuations are inevitable, especially during times of global turmoil; however, the mid- to long-term core inflation level is mainly determined by monetary policy." He said, "All members of the Federal Open Market Committee will never tolerate inflation remaining high for a long time. We work together to firmly restore price stability." Regarding the overall economic situation, Warsh said that the U.S. economy is growing steadily and has shown strong resilience in the face of various external shocks, and corporate investment is the most prominent highlight in the current economic environment. "The growth rate of corporate investment continues to accelerate, and the core driving force comes from the large-scale construction of data centers and the massive demand for supporting AI hardware and software. We are currently unable to predict how much the expansion of the artificial intelligence industry will ultimately boost the economy, but it is foreseeable that what is now called 'artificial intelligence special investment' will be directly regarded as ordinary commercial investment in the future." Wash said. Warsh has previously suggested that the productivity explosion brought about by artificial intelligence will play a role in easing inflation, but this view has been questioned by some economists and internal policy members of the Federal Reserve.
In addition, Warsh also introduced in detail the five major working groups he has led to establish, which will conduct a comprehensive review of the operating mechanism of the entire Federal Reserve system. The five major groups focused on the policy communication mechanism, technical system, balance sheet, Federal Reserve economic data system, and inflation observation framework respectively. (
In addition, Warsh also introduced in detail the five major working groups he has led to establish, which will conduct a comprehensive review of the operating mechanism of the entire Federal Reserve system. The five major groups focused on the policy communication mechanism, technical system, balance sheet, Federal Reserve economic data system, and inflation observation framework respectively. (