The US economy is growing healthily, and inflation may rebound later. In the fourth quarter, the Fed may raise interest rates again.
abstract
Compared with March, the changes in the Fed's meeting on interest rates are mainly more optimistic about the wording of economic fundamentals and more cautious about the expression of inflation.
Three highlights of Powell's speech at the press conference;
Regarding economic growth, it is expected that economic growth will pick up later this year, mainly due to consumer spending and corporate investment;
With regard to inflation, it is estimated that domestic inflation is only temporarily at a low level;
Regarding the direction of monetary policy, unlike the expected interest rate cut in the market, the Fed believes that the current policy is appropriate and there is no possibility of raising or lowering interest rates.
Non-agricultural data comments: the labor market is stable. In April, the number of non-agricultural employees greatly exceeded expectations, and the unemployment rate fell to a low level, but the salary growth did not accelerate further. In commodity production, the wage growth rate of mining industry and construction industry is relatively high, and the wage growth rate of manufacturing industry has been lower than the overall level. In the service industry, the industries with higher salary growth rate are mainly information industry, public utilities, financial industry, leisure and hotel industry, professional and commercial service industry.
20 19 the us economy is stable, the labor market is fully employed, and inflation is picking up. It is possible to raise interest rates again in the fourth quarter.
main body
1。 Comments on the Federal Reserve's meeting on interest rates: optimistic about the economy and inflation, doves are less than expected
Event: At the FOMC meeting in April, the Federal Reserve decided to keep the federal funds rate unchanged at 2.25%-2.50%. The interest rate of excess deposit reserve (excess reserve interest rate) was lowered to 2.35%, which was 2.40% before, in line with market expectations.
1. 1 What's the change in the statement of the Federal Reserve's meeting on interest rates compared with March?
As a mid-quarter meeting, the interest rate meeting in May is not as important as that in March. However, combined with the press conference, there are still some remarkable points that can help us predict the Fed's policy path and deserve investors' attention.
Compared with March, the main changes in the minutes of this meeting are that the wording of economic fundamentals is more optimistic and the expression of inflation is more cautious.
As for the overall economic situation, it is more optimistic than in March. In May, economic activity was considered to have increased steadily, while in March, economic activity was considered to have slowed down compared with the fourth quarter of last year (slower than the solid pace in March).
Regarding inflation, the wording that the downward trend of inflation is mainly due to the decline of energy prices was deleted, and it was considered that the inflation excluding food and energy and core inflation were below 2% (it was considered to be close to 2% in March). The market-based inflation compensation index is still low, and the long-term inflation expectation index based on the survey has hardly changed.
As for the labor market, people think it is still strong. In recent months, on average, new jobs have been stable and the unemployment rate is at a low level.
Residents' consumption and investment in fixed assets of enterprises are consistent with those in March, and they are cautious and think that the growth rate in the first quarter has slowed down. Compared with the meeting held in June 5438+ 10 last year, the wording was pessimistic, when residents' consumption grew strongly and enterprises' investment in fixed assets grew moderately.
Three Aspects of Powell's Speech at 1.2 Press Conference
The meeting focused on the views of Federal Reserve Chairman Paul on monetary policy, economic growth and inflation at the press conference. Generally speaking, Powell is optimistic about the subsequent economic growth and inflation, and thinks that both will rebound. At the same time, unlike the interest rate cut expected by the market, Powell believes that the current interest rate level is appropriate and there is no need to cut interest rates or raise interest rates. Details are as follows:
With regard to economic growth, it is expected that economic growth will accelerate later this year, mainly due to consumer spending and business investment (the prospects and basis of economic growth are consumer spending and business investment). It is believed that appropriate financial situation, high consumer confidence index, high employment level and salary increase will all drive consumer spending. It is believed that the trade negotiations between the United States and China, Japanese and American management certification associations will reduce the uncertainty of business activities, although it is difficult to show great results in the short term, it is very beneficial to economic growth in the medium term.
With regard to inflation, it is predicted that domestic inflation is only temporarily at a low level and will rise further. The factor that inhibits inflation is "it seems to be really short-lived or special".
Regarding the direction of monetary policy, it is different from the expected interest rate cut in the market. Powell said that at present, the Fed does not think it is necessary to change interest rates in any direction. We don't see a strong reason to move in any direction. Powell said that the Fed believes that the current policy is appropriate and does not see the great possibility of raising interest rates or lowering interest rates.
In addition, Powell said that the Fed is an independent institution that is not influenced by politics. We are a non-political organization, which means that we will not consider short-term political factors, we will not discuss these factors, and we will not consider these factors when making decisions.
2。 Non-agricultural data comments: the labor market is stable.
Event: The number of non-agricultural employees in the United States changed by 263,000 in April, with an expected 6,543,800+0,900, and the previous value of 6,543,800+0,900; The unemployment rate in April was 3.6%, expected to be 3.8%, and the previous value was 3.8%; The average hourly wage in April was 3.2% year-on-year, expected to be 3.3%, and the previous value was 3.2%; In April, the labor force participation rate was 62.8%, the expected rate was 63%, and the previous value was 63%.
In April, the number of non-agricultural employees greatly exceeded expectations, but the salary growth did not accelerate further. Specifically, the number of new jobs greatly exceeded expectations, reaching 263,000, the highest in the past three months, and the unemployment rate also fell to a historical low of 3.6%; However, the salary increase was less than expected, reaching 3.2%, and the labor participation rate also dropped by 0.2 percentage points to 62.8%.
Looking at new jobs by industry, among the 263,000 new jobs, 202,000 are concentrated in the service industry, 34,000 are from commodity production, and 27,000 are added by government departments.
In terms of commodity production, the new jobs mainly came from the construction industry (33,000), the manufacturing industry increased by 4,000, and the mining industry decreased by 3,000.
The service industry created 202,000 new jobs, mainly from three industries: 76,000 professional and commercial services, 62,000 education and medical care services (including 53,000 medical and social assistance), and 34,000 leisure and hotel services.
Looking at the salary growth by industry, the salary growth rate of commodity production decreased by 0. 1 percentage point to 2.5%, while the salary growth rate of private service industry remained unchanged at 3.4%.
In commodity production, the wage growth rate of mining industry and construction industry is relatively high (3.4% and 3. 1% respectively), while the wage growth rate of manufacturing industry has been lower than the overall level (1.9%, the previous value is 2. 1%), and only the wage growth rate of equipment manufacturing industry has been at a relatively high level (3./kloc-0).
In the service industry, the industries with higher salary growth rate are mainly information industry (5.5%, with a top value of 6. 1%), public enterprises (4. 1%, with a top value of 5%), financial industry (3.7%, with a top value of 3.3%) and leisure hotel industry (3.7%, with a top value of 3.5).
3。 Future Outlook: It is possible to raise interest rates once in the fourth quarter of 2065438+2009.
Referring to our judgment on the American economy in the overseas economic outlook in the second quarter (both the real estate investment cycle and the inventory cycle are expected to pick up in the second half of the year), the American economy was relatively stable in 20 19, and the downward movement of the economic growth rate from the 20 18 high point was only a process of slowly returning to potential growth, far from recession. With the conclusion of trade negotiations, China's increasing imports from the United States will effectively boost the manufacturing, agriculture and energy industries in the United States, bring about overall marginal improvement in corporate profits, employment, residents' income and consumption chain, and make additional contributions. In addition, the stimulus measures taken by the Trump administration to prepare for the 2020 general election, the performance of the US economy and capital market is expected to exceed market expectations.
On this basis, the rise in crude oil prices will further push up inflation in the United States and contribute to the prosperity of the labor market. The conditions for the Fed to raise interest rates are sufficient. As long as there are no major external risks and systemic financial risks, it is entirely possible for the Fed to continue raising interest rates. On the one hand, it provides enough policy space to cope with economic cycle fluctuations; On the other hand, in order to fulfill the functions of the Fed, some Fed officials believe that the fundamental performance of the US economy is "quite good" and inflation will gradually rise to the target level of more than 2%. They believe that it is appropriate for the Fed to raise interest rates once in 20 19 and once in 2020.
(Article source: Guotai Junan)