September 22 Fed Officials' Speeches: Gaining Insights into the U.S. Economic Outlook and Monetary Policy Direction​

Against the backdrop of the continuous evolution of the global economic landscape, the direction of the U.S. economy has always attracted the attention of the world. On September 22, New York Fed President John Williams and St. Louis Fed President James Bullard delivered speeches on the U.S. economic outlook and monetary policy, providing a crucial window for all sectors to gain an in-depth understanding of the current situation and future trends of the U.S. economy.​

In his speech, New York Fed President John Williams focused on analyzing the complex current state of the U.S. economy. From the perspective of the labor market, although the unemployment rate remains at a relatively low level, the new job creation data has shown signs of slowing down in recent months. The average monthly increase in nonfarm payrolls over the past three months has dropped significantly, far below the level of the same period last year. However, other indicators of the labor market, such as the quit rate and the layoff rate, have remained relatively stable. This indicates that the labor market is currently in a delicate state of balance, but the potential risks should not be underestimated. As the global economic growth slows down and the trade environment remains unstable, the willingness of U.S. enterprises to expand has been restrained, which may further affect the vitality of the job market.​

When talking about the inflation issue, Williams pointed out that although the current U.S. inflation level has not fluctuated significantly, the potential pressure still exists. The recent rise in the prices of some bulk commodities and the transmission effect of tariff policies on the prices of imported goods have pushed up production costs to a certain extent. Although the core inflation indicators are relatively stable, if these cost pressures continue to accumulate and are transmitted to the downstream consumer side, the upward risk faced by inflation in the future will increase significantly. At the same time, he emphasized that the stability of inflation expectations is crucial for controlling actual inflation. At present, market and survey indicators show that long-term inflation expectations are still relatively stable, but short-term inflation expectations have shown signs of rising, and their subsequent trends need to be closely monitored.​

In terms of monetary policy, Williams believes that the current Fed's policy interest rate is in a relatively reasonable range, which not only provides certain support for the economy but also curbs inflation to a certain extent. However, in view of the high uncertainty of the economic outlook, monetary policy needs to maintain flexibility and forward-looking. He implied that in the future, the Federal Reserve will carefully assess whether it is necessary to further adjust its monetary policy stance based on the dynamic changes of economic data, so as to balance the goals of employment and inflation.​

St. Louis Fed President James Bullard's views are more direct. He clearly stated that the U.S. economy is currently at a critical turning point. On the one hand, the momentum of economic growth is gradually weakening. Consumer confidence has been affected to a certain extent due to rising prices and uncertain employment prospects, which has led to weak growth in consumer spending. As the main driving force of U.S. economic growth, the slowdown in the growth rate of consumption will have a significant drag on the overall economy. On the other hand, the inflation problem is far more serious than it seems on the surface. He warned that the impact of tariff increases on inflation may be persistent rather than a one-time shock. As the cost of the supply chain rises, enterprises may have to pass on more costs to consumers, thus triggering a new round of price increases.​

Based on this, Bullard put forward higher requirements for the current Fed's monetary policy. He believes that the Federal Reserve cannot formulate policies only based on existing economic data, but needs to conduct in-depth research on changes in the economic structure and the long-term impact of external factors on the economy. In his view, the Federal Reserve may need to take more decisive actions in the future to cope with the potential risks of economic recession and inflation out of control. For example, adjusting the interest rate level in a timely manner and even considering restarting unconventional monetary policy tools such as quantitative easing.​

By synthesizing the speeches of the two Fed presidents, we can clearly feel the many challenges faced by the U.S. economic outlook. The coexistence of slowing economic growth and inflationary pressure has brought great difficulties to the Fed's monetary policy formulation. Under the dual goals of pursuing full employment and stable prices, the Federal Reserve needs to accurately find a balance in the complex economic environment. In the future, the direction of the U.S. economy will largely depend on how the Federal Reserve interprets economic data and adjusts monetary policy. All parties in the market will also continue to pay attention to the Fed's subsequent actions to judge the direction of the U.S. economy in the wave of the global economy.