Powell： It is still far from the time when the Fed will start to reduce its bond purchases and raise interest rates this year.

　　China news agency, new york, August 27-Jerome Powell, chairman of the Federal Reserve Board of the United States, said at an online seminar on the 27th that the Federal Reserve may reduce its monthly bond purchases from this year. He also said that it is still far from raising interest rates for the first time.

　　On the same day, the Federal Reserve Bank of Kansas City held the annual Jackson Hole Economic Seminar. The theme of this year’s conference was "Macroeconomic Policy under Unbalanced Economy", and Powell made a keynote speech via video link. He said that the US economy has experienced an unprecedented rapid decline due to the COVID-19 epidemic, and the road to recovery is difficult.

　　Powell said that the goal of the Fed’s monetary policy is still to seek full employment and price stability. Recently, the labor market has made remarkable progress, and the inflation rate has made "substantial further progress" towards the goal. Like the point of view at the regular monetary policy meeting in July, he believes that it may be appropriate for the Fed to reduce its asset purchase plan from this year.

　　Since December last year, the Federal Reserve has promised that it will continue to increase its holdings of US Treasury bonds at a rate of at least $80 billion per month and purchase institutional mortgage-backed securities at a rate of not less than $40 billion per month. In this speech, Powell said that he believes that even if asset purchases are completely stopped now, the long-term bonds held by the Federal Reserve in large quantities are enough to maintain loose financial conditions.

　　On raising interest rates, Powell stressed that the timing and pace of reducing the asset purchase plan will not directly send a signal about the time of raising interest rates for the first time, and the criteria for considering whether to raise interest rates are not only different but also stricter than those for reducing the purchase of bonds. Citing a case in the 1950s, he pointed out that monetary policy makers should not try to offset short-term inflation fluctuations, because responding is likely to be counterproductive, especially when the target range of the federal funds rate is close to zero.

　　The Wall Street Journal reported that 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 the asset purchase plan this year. Although Powell’s statement did not give a detailed timetable for code reduction, it made investors more convinced that the Fed is more likely to start reducing its bond purchases this year. In addition, his speech also revealed an important message, that is, it is still far from the time to raise interest rates for the first time.

　　On the same day, the three major indexes of the US stock market rose collectively, among which the Nasdaq Composite Index and the Standard & Poor’s 500-stock index hit record highs at intraday and closing points. Bloomberg quoted analysts as saying that Powell’s speech was biased towards doves, and the market was more willing to accept doves’ remarks. In addition, investors continue to be optimistic about the $3.5 trillion infrastructure construction budget framework and subsequent economic data, and the market investment sentiment has not been affected by the reduction of bond purchase information.

　　The annual Jackson Hole Symposium used to be held in Grand Teton National Park, Wyoming. In recent two years, due to the impact of the COVID-19 epidemic, the conference was adjusted to be held online. (End)