Before delving into this meeting's insights, it is essential to clarify the market's chaotic expectations: the previous meeting locked in a rate hike path of "25 basis points in January + 25 basis points in March + 25 basis points in May," shifting focus to "how long the high-interest rate environment will persist"; however, at the early March hearing, Powell revised his inflation assessment, aiming to accelerate the rate hike pace to 50 basis points and raise the terminal rate to 5.50%; as a result, the market reacted sharply, and in the same week, Silicon Valley Bank collapsed, leading to expectations of no rate hike or even anticipations of rate cuts – the crying child gets the milk.
At this point, the Federal Reserve faces a dilemma between price stability and financial stability; the March meeting ultimately returned to the original path after a lengthy discussion—raising rates by 25 basis points, but everything has changed.
As per usual, let's first highlight the key changes in the meeting statement; this statement interprets the banking crisis and makes corresponding adjustments in monetary policy responses.Particularly note the expressions in Change 2 and Change 4.。
Change 1:
[Excerpt] Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated..
Employment has picked up in recent months...