China News Agency, New York, August 27. The Federal Reserve Chairman Jerome Powell said in an online seminar on the 27th that the Fed may start to reduce the monthly debt purchases this year.

He also said that it is still far from the time for the first interest rate hike.

  On the same day, the Kansas City Federal Reserve Bank held the annual Jackson Hole Economic Symposium. The theme of this year's conference was "Macroeconomic Policy in an Unbalanced Economy". Powell Video Link made a keynote speech.

He said that the U.S. economy has experienced an unprecedented rapid decline due to the impact of the new crown pneumonia epidemic, and the road to recovery is difficult.

  Powell said that the goal of the Fed's monetary policy is still to seek to achieve full employment and price stability.

Recently, the labor market has made significant progress, and the inflation rate has made "substantial further progress" towards the target.

Similar to his views at the July monetary policy meeting, he believes that it may be appropriate for the Fed to reduce its asset purchase plan starting this year.

  Since December last year, the Federal Reserve has promised to continue to increase its holdings of US Treasury bonds at a rate of at least US$80 billion per month, and to purchase institutional mortgage-backed securities at a rate of no less than US$40 billion per month.

In this speech, Powell said that he believes that even if asset purchases are completely stopped now, the Fed's large holdings of long-term bonds are sufficient to maintain easy financial conditions.

  Regarding interest rate hikes, Powell emphasized that the timing and pace of reducing asset purchase plans will not directly signal the timing of the first interest rate hike, and the criteria for considering whether to raise interest rates are not only different but also stricter than those of reducing debt purchases.

Citing a case from the 1950s, he pointed out that monetary policy makers should not try to offset temporary inflation fluctuations, because responding is likely to be counterproductive, especially when the federal funds rate target range is close to zero.

  The Wall Street Journal reported that previously, the minutes of the July monetary policy meeting released by the Federal Reserve had shown that most officials believed that it might be appropriate to start reducing asset purchase plans this year.

Although Powell did not give a detailed timetable for the reduction, he made investors more convinced that the Fed is more likely to start reducing bond purchases this year.

In addition, his speech also revealed an important message, that is, it is still far away from the first interest rate hike.

  On that day, the three major indexes of the US stock market rose collectively. Among them, the Nasdaq Composite Index and the Standard & Poor's 500 stock indexes hit record highs at intraday and closing points.

Bloomberg quoted analysts as saying that Powell's remarks are biased towards doves and the market is more willing to accept dovish remarks.

In addition, investors continue to be optimistic about the US$3.5 trillion infrastructure construction budget framework and subsequent economic data, and market investment sentiment has not been affected by the reduction in debt purchase information.

  The annual Jackson Hole Symposium used to set the venue of the conference in the Grand Teton National Park in Wyoming. In the past two years, due to the impact of the new crown pneumonia epidemic, the conference has been adjusted to be held online.

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