The Fed announced on Wednesday that it will Start to relax Its $120 billion monthly stimulus plan marks one of the most important moments for the U.S. Central Bank to respond to the global pandemic.

However the milestone Almost no registration Financial markets: After this decision, the yield of US short-term Treasury bonds rose only slightly, and the S&P 500 stock index continued to climb steadily.

The lacklustre response not only reflects the Fed’s six months of hard work to prepare investors for the “cutback” of the massive stimulus package, but also reflects Chairman Jay Powell’s insistence that although inflation is widespread, it is now considering raising interest rates. It’s too early.

“It is appropriate to be patient,” Powell said at a press conference Federal ReserveAt the two-day meeting, the central bank said it would reduce its bond purchase plan by US$15 billion a month—a timetable that makes it expected to completely withdraw its stimulus measures by the middle of next year.

Powell even refused to support discussions about when to raise interest rates, which helped to reassure investors’ nervousness, which has intensified in recent days due to the specter of earlier interest rate hikes suppressing the market.

“The Fed is dovish enough, and the market always likes this attitude,” said Christina Hooper, chief global market strategist at Invesco. “No one on the market today is surprised.”

Powell did not directly respond to market expectations-market expectations indicate that interest rates will be raised at least twice in 2022, with the first rate hike coming as early as the third quarter-Powell appealed for patience. He not only pointed out the huge uncertainty that still looms over the economic outlook, but also pointed out the huge foundation that still needs to be made up for repairing the labor market.

“We have questions about when to scale down. We have now answered this question and its speed,” he said. But when talking about the “cancellation” of interest rate hikes, Powell said that the central bank has not yet passed the test of the next monetary tightening, so no results have been achieved.

Powell’s key message is that the Fed does not have autonomous driving

The Federal Reserve has stipulated that it will maintain interest rates at current levels close to zero until it achieves maximum employment and an average of 2% inflation over time.

These thresholds are much stricter than the gradually narrowing thresholds, which only need to “make significant progress” towards the Fed’s goals.

Driven by supply chain bottlenecks and pandemic-related disruptions, the surge in inflation has put pressure on the Fed to consider tightening monetary policy more quickly to offset continued price pressures.

But Powell on Wednesday showed his reluctance to sacrifice the Fed’s employment targets to curb inflation, and the central bank still expects inflation to subside over time.

Nevertheless, the Fed has indeed changed its view on the severity of inflation risks in the United States to a certain extent, admitting that price pressures have exceeded expectations, and that price pressures may continue for longer due to the deterioration of supply chain bottlenecks.

However, Powell firmly believes that the warming of the economic environment does not guarantee a rapid tightening of monetary policy now.

Powell said that the Fed is aware of the “difficulties that high inflation brings to individuals and families”, but insists that the central bank does not have the necessary tools to solve supply chain problems.

Instead, he stated that the Fed agrees with some economists who believe that the United States “a vibrant economy will eventually adapt to imbalances between supply and demand,” and then inflation will drop to levels close to its 2% target.

Nevertheless, Powell struck a balance between his dovish signals and assured that the Fed is “watching carefully” to ensure U.S. economy It develops as expected, promising that if inflation becomes more entrenched, the central bank will act “without hesitation.”

Jeffrey Sherman, Deputy Chief Investment Officer of DoubleLine Capital, said: “Powell’s key message is that the Fed does not have autonomous driving.”

Ethan Harris, director of global economic research at Bank of America, said that perhaps more importantly, Powell bought himself some extra time as the Fed began to push monetary policy back to a near-normal state.

“They are really not sure what to think of the recent acceleration in inflation, they want to collect more data,” Harris said, but he is worried that the Fed will make itself vulnerable to more serious price pressure risks. .

However, for a former Fed worker, Powell’s wait-and-see attitude is correct.

“It’s better to proceed with caution because we know how to deal with inflation,” said Roberto Perli, who is currently the head of global policy research at Cornerstone Macro. “We really don’t know how to deal with low inflation or worse deflation.”

He added: “They are doing the right thing.”