Fed official speaks out: rate cuts should be cautious in the future!

Cook believes that the Fed's rate cuts so far have significantly reduced the restrictive nature of monetary policy.
Federal Reserve Board member Lael Brainard said on Monday that given the robust economy and the fact that inflation has proven to be more stubborn than previously expected, the Fed can be cautious in further interest rate cuts.

Since the Federal Reserve began lowering benchmark interest rates in September, "labor market flexibility has increased, while inflation has proven to be more stubborn than I expected at the time," Cook said in a speech at the University of Michigan Law School. "Therefore, I believe we can be more cautious in further interest rate cuts."

The Federal Reserve cut its policy rate by a full percentage point at its last three meetings in 2024, but the market expects the Fed to keep its policy rate in the current range of 4.25% to 4.5% at its next meeting on January 28-29.

Cook said, "Over time, I think it may still be appropriate to shift the policy interest rate towards a more neutral stance. However, the significant cuts in interest rates so far have significantly reduced the restrictiveness of monetary policy. I have always envisaged acting more quickly in the early stages of our accommodative policy, and then gradually easing as the policy interest rate approaches neutrality."

Cook said she believes the United States has begun the new year in a good state, with the unemployment rate still relatively low by historical standards, and inflation is "gradually, albeit unevenly, returning to our 2% sustainable goal".

In the second half of 2024, key inflation indicators made little progress and remained about 0.5 percentage points or more higher than the Federal Reserve's target.

The non-farm payroll data for December 2024 will be released this Friday, providing the latest insights into US employment and wage growth.

During her speech, Cook devoted most of her time to explaining her views on financial stability, stating that she believes the financial system is "robust and resilient." However, she pointed out some areas worthy of close attention, including the growth of private lending. In the realm of private lending, there are sometimes unclear connections between lending institutions, which could potentially impact the entire financial system in times of crisis.

She added that the growth of artificial intelligence tools could be a source of innovation for the financial system, but if the models have biases or make similar errors, they could also become a source of risk.

Risk warning and disclaimer: The market is risky, and investment needs to be cautious. This article does not constitute personal investment advice, nor has it taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk.#GT新年屡破新高，接下来到多少？ #市场回暖，你买什么？ #ADA热度上升，你怎么看？