The Fed raises interest rates for the fifth time this year, and Powell's speech releases new signals

[Review of the United States] The Fed raised interest rates for the fifth time this year, and Powell's speech released a new signal

　　Chinanews.com, September 22 (Zhongxin Finance reporter Xie Yiguan) On September 21 (Wednesday), local time, the Federal Reserve's September interest rate meeting and the latest statement of Federal Reserve Chairman Powell not only became the focus of the world's attention, but also made U.S. stocks have been on a "roller coaster".

On September 21, local time, the time-sharing chart of the Dow.

The Fed raises interest rates for the fifth time this year, US stocks "diving"

　　On the 21st local time, the Federal Reserve announced to raise interest rates by 75 basis points, raising the target range of the federal funds rate to between 3.00% and 3.25%.

This is the fifth time the Fed has raised interest rates this year, and the third time in a row to raise interest rates by 75 basis points, the most intensive rate hike since 1981.

　　The Fed raised interest rates by 75 basis points, which was still expected by the public, but the "dot plot" reflecting the Fed officials' interest rate expectations made the American people "panic".

　　The "dot plot" of interest rates showed that Fed officials' median forecast for the federal funds rate at the end of the year was 4.4%, significantly higher than the 3.4% forecast in June.

This means that the Fed may raise interest rates by 125 basis points this year, which has become a major factor in the "diving" of the three major U.S. stock indexes.

　　However, Federal Reserve Chairman Jerome Powell said at a subsequent press conference that the Fed will continue to raise interest rates to control inflation, but it cannot raise interest rates forever without pushing the economy into recession.

　　On the 21st, the three major U.S. stock indexes fell again in late trading.

As of the close, the Dow closed down 522.45 points to 30183.78 points, a decrease of 1.70%; the Nasdaq closed down 204.86 points to 11220.19 points, a decrease of 1.79%; the S&P 500 closed down 66 points to 3789.93 points, a decrease of 1.71 %.

The three major U.S. stock indexes closed at the close.

Fed chair: Achieving a 'soft landing' for the economy is very challenging

　　Powell said frankly that in the process of containing inflation and restoring price stability, it will be very challenging to achieve a relatively modest rise in unemployment and a "soft landing" for the economy.

he said

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　　Powell also reiterated the hawkish signal he released in late August, that is, emphasizing the Fed's determination to reduce inflation, and be wary of the serious consequences of prematurely loosening monetary policy and allowing high inflation to solidify.

　　"Under the background of the 'mixed' inflation situation and the uncertain interpretation of inflation, the Fed firmly chooses to defend its credibility and is bound to ensure a fall in inflation, even at the expense of the possibility of a 'soft landing'." Zhong Zhengsheng, chief economist at Ping An Securities, believes that the market has a strong impact on the market. In other words, the short-term market risk is relatively high, because the market is still in the stage of digesting the Fed's new policy ideas, and the US economic recession has not yet materialized, there is still room for adjustment in the pricing of US bonds and US stocks.

The U.S. housing market may usher in a major correction

　　In addition to reiterating monetary policy, at the news conference, Powell also said the U.S. housing market could experience a correction after a period of "red-hot" home price gains.

　　"There's a huge imbalance in the housing market, and house prices are rising at an unsustainable rate." Powell said in the long run, what we need is better alignment of supply and demand so house prices can rise at a reasonable rate.

"In the housing market, we may have to go through a correction to get back to that place."

　　CNN reports that potential home buyers (and sellers) may not be too excited about another big rate hike from the Federal Reserve on Wednesday.

　　Realtor.com Chief Economist Danielle Hale said on CNN Business that the housing market is feeling the impact of higher interest rates.

"As the Fed continues to tighten policy, we need to make further progress in tackling inflation, which does increase the likelihood of a further slowdown in home sales."

Data map: New York, USA.

Photo by Zhongxin Finance and Economics Gong Hongyu

　　U.S. existing home sales fell 0.4% to 4.8 million in August, the lowest level since May 2020, the National Association of Realtors said on Wednesday.

　　Despite weak demand, U.S. home prices have remained high and mortgage rates have risen sharply as the Federal Reserve raised interest rates.

Danielle Hale said that as interest rates continue to rise, it will be harder for would-be homebuyers in the U.S. to get mortgages.

This situation is unlikely to change anytime soon.

　　“Now

, this has led to a further increase in the risk of 'stagflation', so it is also more difficult for the Fed to turn. And the ultimate way to solve the problem of high inflation may be a one-time A more severe recession, such as relying on the collapse of housing prices to rebalance the rent-to-sales ratio in the United States, which is at a historically low level, will eliminate the driving force for rent increases.” Pacific Securities analyst You Chunye believes.

Emerging market external demand faces pressure of "volume and price fall"

　　Judging from Powell's speech and remarks at the press conference, it basically continued the "hawkish" interest rate hike attitude since the Jackson Hole central bank annual meeting.

The “dot plot” of interest rates also shows that the federal funds rate is expected to rise to 4.4%, 4.6%, and 3.9% in the next three years, up 100 basis points, 80 basis points, and 50 basis points, respectively, from the June forecast.

Data map: Federal Reserve Chairman Powell.

Photo by China News Agency reporter Sha Hanting

　　The Fed's tough interest rate hike attitude has also made global capital markets "nervous".

On September 22, after the opening of the Asia-Pacific market, the Japanese and Korean stock markets both weakened.

　　Zhao Wei, an analyst at Sinolink Securities, believes that in the next two quarters or so, the external market will continue to be in a state of high volatility; at the economic level, it is in a sensitive stage of switching from "stagflation" to "recession", and the stability of policy expectations is relatively poor.

Leading indicators show that overseas economies are entering a "recession" window or at the turn of winter and spring.

Considering that the timeliness and effectiveness of monetary and fiscal "returns" will also be greatly weakened, the degree of future "recession" overseas may be underestimated.

　　“The tightening of both U.S. fiscal and monetary policies has dragged down global economic growth. The slowdown in global economic growth and the decline in foreign demand from non-U.S. countries have pushed U.S. nominal inflation to a peak and declined, which is conducive to improving the outlook for U.S. household consumption.” Huachuang Securities Researcher Guo Zhongliang believes that for emerging markets, the Federal Reserve is committed to pushing up real interest rates, which directly leads to a "drop in both volume and price" in the external demand of these countries, and has to bear the pressure of continuous capital outflow, further pressure on economic growth slowdown. increase.

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