Fed Chair Jerome Powell said in a speech on Wednesday that interest rates were approaching neutral levels, spurring US stocks to rise and the dollar falling.
Although the market reacted quickly and rudely, economists did not agree with the statement that Bauer's statement represented a new position on interest rates.
Paul Ashworth, chief US economist at Capital Economics, said, "I really don't think he's a dove. This is not true.He does not say that inflation is weak, nor does he say that the economy is weaker than we thought. The market reacted a littlefrom
He pointed out that the Dow Jones Industrial Average rose more than 500 points after Ball's speech, but yields on 10-year bonds were not moving.
Avery Shenfeld, chief economist at the Imperial Bank of Commerce Canada, agreed with this statement, saying that Bauer was not so dovish.
"The Fed said that they have to raise their level to neutral level. If they want to stop at a neutral level, they can shrink their hands."
Both Ashworth and Shenfeld showed that Bauer did not imply a rate hike in December.
Ashworth believes that the Fed will raise interest rates in March and June next year before stopping. This is lower than the appearance of the latest Fed dot matrix, which raises interest rates three times next year.
Shenfeld also expects to raise interest rates twice next year and believes the Fed will reverse the route to cut interest rates by 2020.
Roberto Perli, a former Fed employee and currently an analyst at research firm Cornerstone Macro, believes that Bauer delivered the message "convincing" to the market.
"This message is" there is no way to set interest rates ", so the Fed does not have to tighten to neutral levels. From a market perspective, this is a convincing message because it solves market concerns about Fed tightening. They worry that the Fed will raise interest rates to levels which is intended to slow down the economy. "
President Trump continued to pressure the Fed and Bauer, and even told the media on Tuesday that he regretted the election of the Paul Fed Chair, who made comments in response to White House pressure in October, said Carl Tannenbaum, chief economist at Northern Trust Co. He hated media accusations that "Paul will withdraw the speech in October."
Compared to the Bauer press conference in September, Tannenbaum did not think that Bauer's attitude towards interest rates "has changed a lot".
He believed that in a little over two weeks, Bower could make a clearer statement at a press conference after a December interest rate hike.