Powell's speech highlights: too much buying in the past, now it's time to turn to a different approach.

The latest speech by Federal Reserve Chairman Powell contains a lot of information.
In simple terms, it means acknowledging that too much liquidity was provided in the past, and now they are preparing to gradually pull back, and the next step may involve paying more attention to employment.
1. Looking back: Generously admitting "the money was given out late"
Powell said that the crazy money printing (quantitative easing) to save the market during the pandemic in 2020 was necessary, but he also reflected: "Looking back now, it really was a bit prolonged."
Why not stop in time? Afraid! Afraid that the market will crash like in 2013 and 2018, and when the liquidity is pulled, it will show you how it dies.
2. Planning Now: The Balance Sheet Reduction Enters the "Final Stage"
The Federal Reserve's "tightening" (balance sheet reduction) that started in 2022 is almost complete.
Powell stated: We will proceed cautiously to conclude, and will not drain the liquidity to avoid another "money shortage" in the market.
3. Looking to the Future: The Wind Has Changed, Employment is More Urgent than Inflation
Now in the eyes of the Federal Reserve, the situation has changed:
· Inflation: Although it is still a bit high, they believe it is a short-term phenomenon caused by tariffs and are not too concerned about long-term issues.
· Employment: The job market has明显降温, becoming more of a headache for them.
So, the policy is about to change! The focus is slowly shifting from "fighting inflation at all costs" to "preventing the job market from getting too cold." Continuing to cut interest rates is highly likely, but they will "take it step by step," without locking in a path in advance.
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