Powell Acknowledges Communication Shortcomings but Keeps September Rate Hike Option Open

ME News reports that on August 6 (UTC+8), amid widespread criticism, newly appointed Federal Reserve Chair Wosh acknowledged communication shortcomings but firmly rejected a “hand-holding” approach to communication, setting a precondition for a September rate hike. Following last week’s Fed monetary policy meeting, U.S. long-term borrowing costs surged as investors felt that Chair Wosh failed to provide sufficient guidance on how to curb inflation. This inflationary pressure was primarily triggered by Iran-related conflicts under Trump’s administration. Investors are concerned that Wosh’s limited communication, amid elevated global energy prices, has undermined his credibility in controlling prices. Last week, the yield on 30-year U.S. Treasury bonds surged past multi-year highs, reaching the highest level since 2007. Prior to the policy announcement, markets priced in only a 33% probability of a rate hike. This rare uncertainty, analysts noted, directly intensified subsequent market volatility. Wosh privately admitted to those around him that he made mistakes during his first ten weeks leading the world’s most important central bank. He acknowledged failing to effectively reinforce the core message of price stability and allowing confusion over whether his long-term Fed reform agenda might influence short-term policy decisions. Despite acknowledging these communication flaws, insiders emphasized that Wosh remains resolute in his belief that these early missteps do not justify abandoning a complete overhaul of the Fed’s communication framework. (Source: ODAILY)