The minutes of the Federal Reserve's September meeting will be released at 2:00 am on Thursday (UTC+8), covering the reasons for the 25 basis point rate hike in September, officials' assessment of the degree of monetary policy tightening, and considerations for future rate hikes. Federal Reserve Chairman Kevin Walsh stated at a press conference after the September resolution that it is difficult to describe the overall financial situation as' restrictive '. The Chicago Fed National Financial Condition Index shows that the US financial situation has continued to relax since its peak in the fall of 2022, and the ICE BofA US high-yield bond option adjustment spread remains narrow. In August, the overall PCE increased by 3.4% year-on-year, the core PCE increased by 3.0% year-on-year, and the current effective federal funds rate is about 3.9%. (Source: Jin Shi)
AI interpretation: The minutes of the Federal Reserve meeting reveal a deep evaluation by decision-makers of the current tightening of monetary policy, clarifying the policy tone of maintaining high interest rates to combat inflation. The sustained easing of the financial environment has partially offset the effect of interest rate hikes, forcing the Federal Reserve to take a tougher stance to tighten liquidity. The market's expectations for the subsequent interest rate hike path will be recalibrated with the disclosure of details in the minutes, and the duration of the high interest rate environment will exceed the market's previous expectations. This policy orientation directly suppresses the market's illusions about loose policies and strengthens the certainty of the continuation of the tightening cycle.
