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[Quick Facts]

1. Powell: The Fed is committed to preserving the labor market.

2. U.S. Republican infighting intensifies, with some Republican Congressmen launching efforts to bring down McCarthy.

3. Guindos: Current interest rate to help achieve inflation target.

4. Mann: Inflation volatility indicates that interest rates will rise.

5. U.S. Treasury yields continue to rise.

6. Bowman: It is likely to raise interest rates further.

7. Barr: Interest rates are at a sufficiently restrictive level.

[News Details]

Powell: The Fed is committed to preserving the labor market

On Monday, Fed President Powell noted at a roundtable that the central bank remains committed to maintaining a robust labor market.

According to the recent non-farm payrolls report, although the U.S. labor force participation rate in August has rebounded from the low in 2020, it is still lagging behind before the epidemic. In addition, job openings in medical, social work, and local government departments are increasing, which also reflects the inequality in the distribution of medical resources in the U.S.

Powell emphasized that the government is taking measures to encourage more people to re-enter the labor market. He believed that a continued good labor market would not only drive wage growth but would also bring other benefits. He pointed out that as the economy continues to grow, wages for low-income groups will also increase. But to achieve this goal, the key is to maintain price stability.

U.S. Republican infighting intensifies, with some Republican Congressmen launching efforts to bring down McCarthy

The Republican infighting is intensifying after Congress passed a temporary funding bill to avoid a government shutdown. Republican Representative Matt Gaetz has vowed to introduce a motion this week to remove House Speaker McCarthy, an initiative that could shake the balance of power in Congress.

McCarthy said Monday that Gaetz opposed his move based on personality and a private matter, not policy. He said: "Don't judge the Republican by Gaetz, but judge by our enemies." It is reported that if Gaetz can persuade four Republican hardliners to join, plus the Democratic Party, his opposition is likely to succeed. But Democrats could also lend McCarthy a helping hand by voting against the motion or choosing not to vote at all.

Guindos: Current interest rate to help achieve inflation target

ECB Vice President Guindos said in a speech on Monday that interest rates at current levels will help bring eurozone inflation back to the 2% target. Data showed both headline and core inflation slowed in September, a trend expected to continue in the coming months.

Mann: Inflation volatility indicates that interest rates will rise

Mann, a Bank of England official, said in a speech on Monday that when it comes to interest rate policy, I am a hawk. My forecast is at the upper end of the fan chart. Domestic demand is more resilient. The Bank of England's forecast is very different from what I think.

Real interest rates recently turned positive, and monetary policy became tighter. Market surveys suggest the interest rate is higher, and the Bank of England has overestimated the scales and effects of the monetary policy in the past.

We underestimated the consumer response to inflation, which has an upward bias, and inflation volatility suggests that interest rates will rise.

U.S. Treasury yields continue to rise

The U.S. government has temporarily avoided a shutdown, saving the U.S. economy from potential damage. U.S. Treasuries fell on the first trading day since the U.S. government averted a shutdown after Congress passed a temporary funding bill to keep the government operating until November 17.

This pushed the market to revise its bets on the Fed raising interest rates this year and further reduce its bets on a rate cut next year. The bond market kicked off the final quarter of the year in a new round of selling, with 10-year and 30-year U.S. Treasury yields hitting multi-year highs on Monday. The benchmark 10-year Treasury yield hit 4.7%, a new high since 2007, and the 30-year Treasury yield rose above 4.81%, a new high since 2010. U.S. Treasury yields from 5 to 30-year rose by more than 10 bps on the day.

Bowman: It is likely to raise interest rates further

"I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way." Fed Governor Bowman said Monday in prepared remarks to a banking conference. Although considerable progress has been made, inflation remains too high, and I expect the Fed may need to raise interest rates further and keep them at a restrictive level for some time.

Barr: Interest rates are at a sufficiently restrictive level

Speaking at a separate event in New York on Monday, Barr, the Fed Vice Chair for Supervision, said he believes rates are now "at or very near" a sufficiently restrictive level. In my opinion, the most important question at this moment is not whether an additional rate increase is needed this year or not, but rather how long we need to keep rates at a sufficiently restrictive level to achieve our goals, and I expect it will take some time.

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