Fed's Powell Reaffirms Commitment to Price Stability, Leaves October Rate Decision Unhinted

Bangkok IMF dialogue, refrain from announcing policy, maintain stance, comprehensive judgment on growth, employment, and prices... Expansion of investment and impact of AI were also mentioned.

Kevin Warsh, chairman of the U.S. Federal Reserve, reaffirmed his commitment to price stability but did not give any advance signal about this month's base interest rate decision.

According to Reuters and FXStreet on the 16th, Chairman Wash had a conversation with IMF President Kristalina Georgieva at the International Monetary Fund (IMF) and World Bank annual general meeting held in Bangkok, Thailand. He said, "I do not predict the outcome of the meeting," and stated that he would not explain in advance what decisions will be made at the remaining meetings this year.

This statement came as the pressure of rising prices in the United States was highlighted again. According to the U.S. Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) in September rose 3.7% and the Producer Price Index (PPI) for final demand rose 6.3% compared to the same month last year. In the case of CPI, gasoline prices rose 9.1% from the previous month, accounting for more than half of the total monthly increase.

Wash explained the interest rate hike last September as a measure to withdraw some of the monetary easing policy to stabilize prices. At the time, the Federal Reserve increased the base interest rate target range by 0.25 percentage points, setting it to 3.75-4.00% per year.

He assessed that economic trends after the September meeting were generally consistent with the Fed's expectations at the time. He announced that future policies will be decided at meetings held in October and December for the remainder of this year by comprehensively examining growth, employment, and price trends.

Wash evaluated the investment expansion positively. He said that the surge in investment was the result of good policies and was selected as the most important upward factor in the global economy.

The economic impact of artificial intelligence (AI) was also mentioned. It was expected that the impact of AI would appear on the demand side before the supply side, and although it would change the real economy, the short-term employment impact was uncertain. It was also emphasized that the Federal Reserve must look at financial stability risks and extreme downside risks that can be responded to through policy.

The next FOMC meeting will be held on the 27th and 28th local time. The blackout period, in which Federal Reserve officials are restricted from making external comments related to monetary policy, begins on the 17th.