Powell's Debut Approaching: Market Focused on Dot Plot and Potential Shift in Fed Communication

BlockBeats News, June 17th. On Thursday morning Beijing time, the newly appointed Federal Reserve Chair, Mr. Powell, will preside over his first FOMC interest rate meeting. The market generally expects this meeting to keep the interest rate unchanged, but the focus has shifted to a potential adjustment in the policy framework and communication mechanism.

Analysts point out that current market pricing indicates a near-term interest rate hike expectation, as inflation and employment both strengthen, creating uncertainty in the Fed's policy path. Against the background of oil price fluctuations and expectations related to the Strait of Hormuz, some opinions believe that the upward pressure on inflation may temporarily ease, but the warming labor market limits the space for rate cuts.

One of the key points of this meeting is the quarterly dot plot. The market will observe whether FOMC members' divergence on the future interest rate path widens, and whether they signal a clear rate hike or a longer maintenance of a high rate. Historical data shows that a majority of members currently support keeping the interest rate unchanged, and a dominant tendency towards rate hikes has not yet formed.

Longer-term changes may focus on a reform of the communication mechanism. Analysis suggests that Mr. Powell has been critical of the dot plot and forward guidance, believing in their limited predictive accuracy. He may push for a weakening or even an adjustment of the tool's usage during his term. This change may increase policy uncertainty and impact the low-volatility market environment.

Overall, the market's short-term focus is on whether this meeting will signal a clear policy direction, while the medium to long-term focus is more on whether the Fed's communication framework is entering a period of structural adjustment.