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What did Powell say at the congressional hearing? He mentioned CPI, tariffs, Trump, Cryptos, and Musk's DOGE.
Powell stated that the CPI indicates the Federal Reserve is close to but has not yet achieved its inflation target, and the Fed will not be overly excited by the quality of one or two data points; he hinted that interest rates will remain high in the near term, saying, "hope to maintain a restrictive policy temporarily"; he mentioned "there's enough time to wait for" the restrictive monetary policy to take effect, "there are ways to continue to reduce the balance sheet", and reaffirmed that reserves are "adequate"; he stated that he would not resign even if Trump requested it; the Federal Reserve has not been cut off from access to the data needed for work, and DOGE's access to the payment system is very cautious; the establishment of the vice chair for financial supervision at the Federal Reserve has led to greater fluctuations in regulatory policy; the 2020 policy framework does not restrict the Fed's response to inflation.
Top economists: The Federal Reserve will pause interest rate cuts for a long time and should theoretically raise interest rates.
Economists state that the hot inflation data is not an "outlier" as it is consistent with other economic data performances.
After the USA CPI data unexpectedly "surged", the Federal Reserve's interest rate outlook changed dramatically!
Due to inflation in the USA exceeding expectations, traders in US Treasury bonds currently expect the Federal Reserve will only cut interest rates once in 2025, and have pushed back their estimate for the next Fed interest rate cut from mid-year to December. Prices of US Treasury bonds have plummeted, and yields on bonds of all maturities have risen by at least 8 basis points.
Powell is both an ally of Trump and a scapegoat.
Powell's work in maintaining market confidence and independence is particularly outstanding; if Trump could recognize this and reconsider his plans for the Federal Reserve chair position, it would be beneficial for him.
Economist Mohamed El-Erian suggests that the Federal Reserve will tolerate higher inflation.
Famous economist Mohamed El-Erian stated in an interview with Bloomberg that with the inflation data in the USA exceeding expectations, the Federal Reserve will constrain interest rate cuts for a long time. He pointed out that if the Federal Reserve is truly committed to the 2% target, theoretically it should raise interest rates now, but it is more likely that the Federal Reserve will maintain rates unchanged, tolerating higher inflation to protect economic growth and the narrative of American exceptionalism. He noted that the data is not good news for the Federal Reserve on the surface, as it will endure high inflation and continue to commit that things will improve, believing that the Federal Reserve will stop cutting interest rates, with the pause being much longer than the market expects. He also mentioned last month's inflation data.
Market analysis: USA inflation exceeds expectations, pressure on oil prices with another major Put factor.
On February 13, according to Gelonghui, oil prices in Asia fell slightly in early trading as traders digested the USA CPI data and signs of supply pressure. Pepperstone's strategist Quasar Elizundia stated that higher-than-expected inflation reinforced the view that the Federal Reserve may maintain high interest rates, putting pressure on CSI Commodity Equity Index denominated in dollars. He added that Trump's remarks about negotiating an end to the conflict in Ukraine also sparked speculation about easing restrictions on Russian oil producers. "If this becomes a reality, it will reduce the supply risks from Russia and have an impact on the prices of Crude Oil Products."