Recently, the speech by Fed Chairman Powell has attracted widespread attention from the market. In the latest interest rate decision, the Fed lowered rates by 25 basis points as expected, but Powell's remarks were generally hawkish, which became the main reason for the market pullback.

Powell clearly stated that he does not support further interest rate cuts in December unless there is a significant deterioration in the labor market. He emphasized multiple times that the current unemployment rate remains at a historical low of 4.3%. Analysts believe that if the unemployment rate does not exceed 4.5%, the likelihood of a rate cut in December is low. However, if employment data continues to be weak, the Fed may be forced to take action.

Regarding inflation issues, Powell has shown a relatively tolerant attitude. He believes that the recent rise in commodity prices is mainly influenced by fluctuations in tariffs, rather than overheating demand. Powell expects that if tariff policies stabilize, inflation will gradually decrease. It is noteworthy that non-tariff inflation is close to the target level of 2%, so current inflationary pressures are not prominent, and the key variable remains in the labor market.

In this speech, Powell was particularly cautious regarding issues related to the stock market and did not directly respond to the question of whether 'the stock market is too high.' However, he acknowledged that the rise in the stock market has indeed boosted consumer confidence and spending, providing support for the economy.

There are still differences within the Fed regarding the direction of policy. Some members advocate for accelerating the pace of interest rate cuts to prevent an economic downturn, while others prefer to slow the pace to prevent a rebound in inflation. Powell has currently chosen a relatively prudent path.

It is worth mentioning that the Fed plans to stop tapering in December, which is seen as a relatively positive signal. Powell mentioned that the reserve size may stabilize in the range of 8% to 10% of GDP, which means market liquidity is expected to stabilize. This timing is basically in line with previous predictions from mainstream institutions, further validating market expectations.

Overall, the Fed's policy orientation has undergone a subtle adjustment, reflecting a cautious attitude towards the economic outlook and efforts to balance multiple interests. Market participants need to closely follow subsequent economic data, especially changes in the employment market, to better grasp the direction of Fed policy.