Tomorrow morning will usher in the Federal Reserve's resolution on interest rate in May.
From April 30 to May 1 local time, the Federal Reserve held a two-day interest meeting. This interest rate meeting has attracted much attention, and the market is generally concerned about whether the Federal Reserve will release relevant interest rate reduction signals. However, the meeting will not release a new summary of economic forecasts. Therefore, the speech of Fed Chairman Powell after the meeting is particularly important.
Several groups of economic data released before this interest meeting deserve special attention.
In the first quarter, US GDP growth was not only lower than expected, but inflation also rose.
On April 25 local time, the official website of the U.S. Department of Commerce disclosed that, according to estimates, the real gross domestic product (GDP) of the United States in the first quarter of 2024 grew at an annualized rate of 1.6% on a quarterly basis, far below the market expectation of 2.5%.
At the same time, PCE data of the United States in the first quarter and March exceeded expectations.
The overall personal consumption expenditure (PCE) price index of the United States rose 3.4% year-on-year in the first quarter, compared with 1.8% in the fourth quarter of last year. After excluding food and energy prices, the core PCE price index rose by 3.7%, and the previous value was 2.0%.
The overall PCE price index of the United States rose 0.3% month on month and 2.7% year on year in March, exceeding the market expectation of 2.6%. Excluding food and energy, the core PCE price index rose 0.3% month on month and 2.8% year on year, higher than the market expectation of 2.7%.
In May, there is a high probability that the interest rate will remain unchanged, and the interest rate reduction in the first half of the year may be hopeless
As the economic growth was lower than expected, inflation rose in the first quarter, and the market believed that the timing of the Federal Reserve's interest rate cut this year was more uncertain.
"I expected the Federal Reserve's meeting in May to hold its ground until the second half of the year, when it would assess whether to cut interest rates based on economic data." Hu Jie, a professor of Shanghai Senior School of Finance at Shanghai Jiaotong University and a former senior economist of the Federal Reserve, analyzed the situation to Pengpai News (www.thepaper.cn) and said that the recent GDP growth rate has declined, but it is still in a good positive range, and the inflation rate has been volatile, It may even rebound, so we can judge The Federal Reserve will keep interest rates unchanged 。
Hu Jie said that since the end of last year, the last kilometer of inflation rate decline has been very tight, with repeated shocks and extremely unstable downward trend. Therefore, it has always been judged that the Federal Reserve will consider cutting interest rates in the second half of the year. Now it seems that although GDP growth has slowed down, it is still in a healthy positive range, so It is unlikely to cut interest rates in the first half of the year. Although it is possible to cut interest rates in the second half of the year, it depends on the economic data released at that time. According to the current trend, the probability of interest rate reduction before September is not high.
Bai Xuexiang, Senior Deputy Director of the Research and Development Department of Oriental Jincheng, analyzed the surging news and said that, considering the previously announced inflation rate has rebounded in an all-round way, There is no doubt about the outcome of the interest rate meeting in May, that is, the Federal Reserve will keep the interest rate unchanged 。 After the release of the first quarter GDP and PCE inflation data, economic resilience will further raise the threshold for the Federal Reserve to cut interest rates in the future, which means that The time point of interest rate cut by the Federal Reserve will be further postponed 。 In fact, the current market generally expects that, The Federal Reserve may cut interest rates after September Some Fed officials are even discussing the possibility of raising interest rates.
Snow White believes that under the condition that the US economy and inflation are both more resilient than expected, In the first half of the year, there was almost no motivation and possibility to raise interest rates 。 "In the second half of the year, we judged that the implementation of interest rate reduction was still the main direction of the Federal Reserve's monetary operation."
Specifically, first It is expected that inflation still has room to fall The reasons behind this mainly include: the gradual cooling of the labor market has eased the pressure on wages; The decline of newly signed leases is gradually included in the early stage to promote the easing of housing inflation pressure; The price of second-hand cars and new cars continued to fall. But more importantly, In the future, it is not only inflation cooling that may drive the Federal Reserve to cut interest rates, but also the economic downturn may force the Federal Reserve to cut interest rates quickly 。 Data shows that the nominal interest rate in the United States is not only high, but also the real interest rate after considering the price factor is about 2.0%, which has lasted for some time. This is likely to have an important impact on consumption in the second half of the year or later, which will drive the US economy to decelerate significantly, or even decline. At that time, the Federal Reserve may cut interest rates significantly. In general, There is great uncertainty about the time point of the first interest rate cut. It is more likely to start in the third quarter, and the interest rate will be cut 1-2 times in the year.
The Federal Reserve will release more hawkish signals this time?
According to foreign media reports, recently, Deutsche Bank economists wrote in a report that Powell may continue to say that the monetary policy stance of the Federal Reserve is restrictive at this week's interest meeting.
In this regard, Cui Xiao, senior economist of the United States at Swiss Baida Wealth Management, believes that strong domestic demand and upward revised inflation indicate that the Federal Reserve will take a more patient attitude in policy adjustment. At this meeting, The Federal Reserve is expected to take a hawkish stance 。 Federal Reserve Chairman Powell will hint that the data suggest that the time of interest rate cut will be later, and the number of interest rate cuts will be reduced. "We expect that the gradual slowing of inflation and moderate slowing of demand will prompt the Federal Reserve to cut interest rates twice this year, but it is inclined to cut interest rates later and less frequently."
Hu Jie said that from the inflation data, The Federal Reserve will release a more hawkish view in May than in March 。 Although the GDP growth rate in the first quarter announced earlier was lower than expected, the Federal Reserve must be more worried about the stickiness of inflation rate, and the dove view is obviously weak.
Snow White believes that, against the background of continuous rebound in inflation and no obvious signs of economic downturn, The possibility of the Federal Reserve clearly releasing the signal of interest rate reduction in May is very small. In fact, judging from the recent intensive statements of Federal Reserve officials, due to the uncertainty of inflation trend, The hawkish voice within the Federal Reserve is growing, and generally cautious about cutting interest rates, It is believed that the necessity of significantly reducing interest rates is significantly reduced. In the balance between growth risk and inflation risk, it is also more likely to believe that the inflation risk caused by premature or substantial interest rate cuts is higher.
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