Federal Reserve Chairman Powell: Inflation risks easing, we will continue to achieve the 2% inflation target and maintain policy independence.

Federal Reserve Chairman Kevin Wash said on Wednesday that with recent inflation expectations easing, the inflation risks facing the United States have been somewhat relieved. However, the Federal Reserve will continue its steadfast commitment to lowering the inflation rate to the 2% target, and emphasized that the central bank will maintain independence in monetary policy decision-making and will not be influenced by political factors. After Wash's speech, the three major U.S. stock indexes narrowed their losses, with the Dow turning positive, the Nasdaq narrowing its losses to 0.31%, and the S&P 500 index slightly down by 0.05%. Wash, speaking at the European Central Bank Forum in Sintra, Portugal, said that in the past few weeks, both U.S. inflation expectations and inflation risks have decreased, providing a positive signal for future inflation trends. "In the past four weeks, inflation expectations have fallen, and inflation risks have also decreased." However, he reiterated that the Federal Reserve's goal of achieving price stability will not change. "We will achieve price stability in the United States, which is a mission shared by the Federal Open Market Committee (FOMC), and our goal is to accomplish this task." Wash said, "As for the specific strategies and tactics to be adopted, they will be decided based on future developments." When discussing monetary policy, Wash once again emphasized that the Federal Reserve will maintain its independence in policy making. Recently, U.S. President Trump has continued to call for significant interest rate cuts from the Federal Reserve to support economic growth. However, Wash stated that the Federal Reserve will not change its decision-making principles due to external pressure. "The Federal Reserve has always been an independent central bank, and it is now and will not change in the future." It is worth noting that Wash once again made it clear that the Federal Reserve will no longer provide "forward guidance" on interest rate paths as it has in the past. When asked if there could be a rate hike at the July meeting, Wash joked that the questioner was trying to make him break the principle of not providing forward guidance. He said that the Federal Reserve will "pave a new path" in its monetary policy communication. "I hope that when the committee meets in four weeks, everyone will be able to have a full discussion." Wash said. He was referring to the next FOMC monetary policy meeting scheduled for July 28-29. In fact, last month, when he held a press conference for the first time as the Federal Reserve Chairman, Wash stated that the FOMC unanimously believes that forward guidance is no longer suitable as a policy communication tool in the current environment. He reiterated that day: "Last month I said that since the next meeting is only six weeks away, we will not provide forward guidance. Now, only four weeks are left until the next meeting, and this principle still applies." Although the Federal Reserve kept the target range for the federal funds rate unchanged at 3.5% to 3.75% last month, the latest economic forecasts show that an increasing number of officials support further rate hikes this year to address the most severe inflation situation since 2023. The latest dot plot shows that out of the 18 policymakers, 9 expect at least one rate hike this year. However, Wash himself did not reveal his rate forecast. Currently, the interest rate futures market has priced in expectations of at least a 25 basis point rate hike by the end of the year. In addition, Wash also introduced the internal reform work that the Federal Reserve is advancing. He said that the Federal Reserve had already established five special working groups to evaluate policy communication, balance sheets, data applications, productivity and employment, and inflation frameworks. Wash revealed that the news about the composition of the working groups will be announced as early as next week, including not only internal Federal Reserve members but also inviting external experts to participate, and some members will also come from areas outside the United States.