shine trader limited reports:
Shanghai Securities News China Securities Network (Reporter Wei Qian) The inflation problem is receiving high attention from all over the world. On October 22, at the 3rd Bund Financial Summit, the President and CEO of the Federal Reserve Bank of New York, John Williams, said through a video connection that historically, the current inflation trend is low and we must really think about currency. The three main tools of the policy are actual actions, including the adjustment of short-term interest rates; the second is forward-looking guidance or information on possible future interest rate paths to communicate with the market; and the third is the balance sheet.
Two years ago, John Williams proposed a “flexible inflation target.” The main principle is to anchor long-term inflation expectations at 2%. He believes that this is a very forward-looking concept, that is, to ensure that inflation expectations are consistent with long-term goals and are actually achieved.
John Williams said that he does not believe that anchoring alone is a good goal, but hopes that inflation can be maintained at a level consistent with long-term goals. The Federal Open Market Committee (FOMC) has made a good balance to ensure that it can achieve its monetary policy goals, namely, employment and price stability. Therefore, it is important to have an anchored level of expectations consistent with long-term goals, and this is also one of the challenges. Including the United States and other countries have seen that anchoring inflation expectations at too low a level will lead to actual inflation, which will limit the ability of monetary policy to respond to negative shocks in the future.
Regarding the above three monetary instruments, John Williams said, “Of course, we are also thinking about the issue of balance sheets. The reduction of purchase plans is a very important policy decision, which will also have an impact on financial conditions.”
When talking about risks in the real estate market and the impact of price fluctuations on monetary policy, John Williams said that housing prices in the United States are growing very fast. In fact, valuations in many markets, including the equity market and the real estate market, are at a relatively high level. But he believes that, at least for now, there is no huge risk of affecting financial stability. The reason is that after the financial crisis, banks have become more capitalized due to changes in reforms, and can better resist the risks brought by the short-term downturn in the real estate market. Second, for many years, most of the housing financing actually came from government agencies. Guaranteed, instead of as before, many mortgages come from the private sector, and relatively speaking, the credit risk is more controllable.
”Therefore, I believe that the real estate market has macro risks related to asset price adjustments. This is definitely one of the items on my watch list, and I must pay attention to it. But from the perspective of financial stability and the perspective of banking crises, the risk in this area is more It used to be much smaller because we have taken a lot of strong measures to ensure that the asset situation is more healthy from a personal perspective.” John Williams said.