May 2025 FOMC Debrief

Hello my friends, today is May 7th and this is my May FOMC debrief. Now before we get into what happened today, let's level set a little bit. So between the March meeting and today we had a couple of developments. First off, of course, looking at the data front, we had first quarter GDP that came in negative. But of course, that was largely due to massive imports. If you look at the underlying, the GDP data was pretty good. But of course, between first quarter and today we have liberation day and since then everything is changing and no one really knows what will happen.

你好，朋友们，今天是5月7日，这是我对5月份美联储货币政策会议的简要回顾。在我们讨论今天发生的事情之前，先来理清一些背景信息。在3月份的会议和今天之间，我们看到了几个发展。首先，在数据方面，第一季度的GDP为负增长，但这主要是因为大量进口的原因。如果看其内在的情况，GDP数据其实还不错。不过，从第一季度到今天，我们经历了解放日，从那时起一切都在变化，没有人真正知道接下来会发生什么。

Now on the labor market front, labor market continues to be fine, non-farm payrolls was solid, but overall though, the labor market is clearly cooling. You can see that in the average wages slowing down, average wage declining, decelerating, and of course looking at various other measures such as Joltz, Jelleville Appianties, you definitely have a cooler labor market. On the third front, we have the Fed basically divided into two camps.

在劳动力市场方面，目前劳动力市场状况良好，非农就业人数表现稳定。但整体来看，劳动力市场显然在降温。这可以从平均工资增长放缓、平均工资下降、增速减缓中看出，当然还有其他指标，如JOLTS（职位空缺和劳动力流动调查）等也显示出市场趋冷。在第三方面，美联储基本上分为两个阵营。

I think the majority camp led by Chirpau is one that advocates caution. So we have this big, big change in how the world operates, liberation day, and if you have tariffs, so again, that's a negative supply shock. It could mean higher inflation, but it necessarily means lower growth. So if you are a Fed that has a mandate, again, stable prices, full employment, what are you supposed to do? Now Chirpau was of the mind that we just got to stand, wait and see, see what the data says and then react because he feels that he's, no, he's talking, he feels that it's pretty uncertain how the data will evolve and he also points to inflation expectations, potentially becoming unanchored.

我认为，Chirpau 领导的多数阵营是一个提倡谨慎的阵营。因此，我们面临着全球运作方式的重大变化——解放日。如果有关税，这将是一个负面的供应冲击。它可能意味着更高的通货膨胀，但一定意味着更低的增长。因此，如果你是一个有稳定物价和充分就业任务的美联储，你应该怎么做呢？Chirpau 认为我们应该静观其变，看看数据怎么说，然后再做出反应，因为他觉得数据的发展相当不确定，他还提到通货膨胀预期可能会变得不稳定。

As we know, if you look at some surveys of consumer inflation expectations, like the ones provided by the University of Michigan, some people are really freaked out about tariffs and their inflation expectations for the coming year have really skyrocketed. So if you are a central bank, then you are afraid that inflation expectations could be deanchored because you think that if that happens, then you might lose control of inflation so that advocates for caution.

正如我们所知，根据一些消费者通胀预期的调查，例如密歇根大学提供的调查，一些人对关税感到非常担忧，他们对未来一年的通胀预期大幅上升。所以，如果你是中央银行，你就会担心通胀预期可能会失去稳定性，因为你认为如果出现这种情况，你可能会失去对通胀的控制，因此这提醒我们需要谨慎行事。

Now another part of the FOMC led by Governor Waller and I'm not sure if there are other people beside him, I imagine there are, is that tariffs, yes, could potentially increase the inflation, but that increase will be transitory. What does he mean by that? So let's say that we have tariffs 10% on all imported goods. That means if something, okay, just just rough assumption, something costed, something was priced $100, maybe it's a little bit more, maybe there's a full pass through to the consumers and so consumers now pay 110.

现在由理事沃勒（Governor Waller）领导的FOMC（联邦公开市场委员会）的另一部分人认为，关税确实可能会推动通货膨胀，但这种上涨将是暂时的。这是什么意思呢？假设我们对所有进口商品征收10%的关税，这意味着如果某件商品原价是100美元，也许消费者最终支付的价格可能是110美元（只是一个粗略的假设，也许还有其他费用完全转嫁给消费者）。

But then next year, of course, we're not having an additional 10% tariff on top of that, so next year, maybe we go back to 2% inflation so that $110, maybe it becomes $112, $113, $113, or something like that. So it's a jump in the level of the prices, but not a change, not a sustainable change in the rate of change, which is, of course, inflation. So from his perspective, tariffs, if there is an inflationary impact, it will be transitory and according to standard central banking playbook, in transitory price levels, you just look through it and so he wouldn't do anything, but if the unemployment rate rose, he would be eager to cut rates because he's more concerned about that.

当然，明年我们不会再有额外的10%关税加在上面，所以可能通胀率会回到2%。因此，110美元可能会变成112美元、113美元左右。这意味着价格水平有了跳升，但这不会带来持续的变化，也就是不会使通胀率发生变化。从他的角度来看，关税如果对通胀有影响，那将是暂时的。根据标准的央行策略，面对暂时的价格水平变化，我们只需淡定应对，他不会采取任何措施。但如果失业率上升，他会急于降息，因为他对失业率更为关注。

So that's where we were heading into the FOMC meeting. The market was not pricing in any possibility, very, very, very small possibility of any movements on the policy rate and the market was pricing in. You know, a reasonable probability that we could have cuts, let's say, 20, 20, 25% probability of we could have cuts in June. Okay, so no one was expecting anything. Now, at the meeting, Chair Powell was basically asking the same question over and over again, that is to say, why don't you cut rates? Why don't you cut rates? We have all this really, all this sentiment data that's saying that everyone is sad, everyone is feeling uneasy about the future.

所以这就是我们当时面临的FOMC会议的背景。市场几乎没有预期政策利率会有变动，可能性非常非常小。市场预测到有一个合理的概率，比如说20%到25%的可能性，在6月份进行降息。因此，没有人预计会有任何变化。然而，在会议上，鲍威尔主席基本上反复问同一个问题，那就是，为什么不降息？为什么不降息？我们有这些情绪数据表明，大家都感到沮丧，对未来充满不安。

Look at all those container shipping data from China. It's obvious that the economy is slowing down. And to this, Powell will reply this. People are feeling stress and concern, but unemployment hasn't gone up. And the job creation is fine. Wages are in good shape. You know, people are not layoffs or people are not getting laid off at high levels. You know, initial claims for unemployment are not increasing, you know, in any kind of impressive way.

看看那些来自中国的集装箱运输数据，很明显经济在放缓。对此，鲍威尔会这样回应。人们感到压力和担忧，但失业率并没有上升。而且，新增就业状况良好，工资也保持在一个不错的水平。大家并没有大规模地被解雇。首次申请失业救济的人数并没有显著增加。

So, the economy itself is still, you know, in solid shape. Basically, he understands that the sentiment data from surveys has been pretty downbeat. However, from his perspective, the hard data is good, solid. So, you know, all these people complaining in surveys and on TV about the economy, you know, he doesn't really see that in the data yet. And he wants to see that in the data before he acts. Now, if he does this, still, of course, he's going to be committed to being late. Because, you know, when something shows up in the data, it's kind of, it's kind of, you know, likely too late to do anything about it, right? So usually sometimes central banks would like to act preemptively. So let's say that they think a soda on his coming might want to adjust. But Paola was not doing this right now.

那么，整体经济状况还是不错的。基本上，他明白从调查中得到的情绪数据一直比较悲观。然而，从他的角度来看，实质数据还是很好的，很坚实。所以，那些在调查中或电视上抱怨经济状况不好的人，他在数据中并没有真正看到这样的情况。他希望在数据中看到了问题才采取行动。现在，如果他这样做，当然他会面临反应迟缓的风险。因为当问题在数据中显现时，可能已经有点晚了，对吧？所以通常情况下，央行喜欢预先采取行动。如果他们认为问题将要出现，可能会想进行调整。但Paola现在并没有这样做。

And the reason he's not doing this is that he is afraid of stack flation. So in his remarks, he notes that we have all these different policy changes on the horizon. Immigration, trade, he added fiscal this time, and also regulatory changes. So all these changes, some of them are inflationary, some of them are negative growth and so forth. Now, the possibility, the potential outcomes of all this are really, really wide. We could have a world where we could have, you know, a big inflationary shock. We could have a world where we could have very negative growth. So a jump in unemployment. He just doesn't really know what world we will be. And from misperceptive, there is the potential, as he says.

他没有采取行动的原因是他害怕经济滞胀。在他的讲话中，他提到我们有许多不同的政策变革即将到来，比如移民政策、贸易政策，这次还提到了财政政策和监管变化。这些变化中有些可能引发通货膨胀，有些可能导致经济增长负面。因此，这一切可能产生的结果是非常多样的。我们可能面临一个大的通货膨胀冲击的世界，也可能面临经济增长非常缓慢、失业率猛增的世界。他实际上不知道我们会处于哪种情境中。他说，从他的角度来看，这种可能性确实存在。

You know, the risks to higher inflation and higher unemployment have both gone up as we noted in our statement. And we've got to monitor both of those. We actually have a potential situation where there may be a tradeoff or attention between the two. Potentially, we don't have it yet. We may not have it, but that's what we have. And that's why I think it's a very different situation. That we could be in a world where we would have high inflation and high unemployment. So basically a stack stationary world where they will have to make very difficult trade offs, whether the hike rates to get inflation down or to lower rates to get unemployment rate down.

你知道的，正如我们在声明中提到的，高通胀和高失业率的风险都增加了。我们必须同时关注这两个问题。实际上，我们可能面临一个潜在的情况，即这两者之间可能存在一定的权衡或冲突。目前这种情况还没有发生，我们也不确定它会出现，但这是我们所处的状况。因此，我认为这是一种非常不同的形势。我们可能进入一个高通胀和高失业率并存的世界，也就是所谓的滞胀世界。在这种情况下，我们将不得不面临很艰难的选择，是通过加息来降低通胀，还是通过降息来降低失业率。

Again, there's a tradeoff there. So you hike rates to get inflation down. You would make unemployment worse in theory. And if you lower rates to make unemployment to lower the unemployment rate, you can make inflation higher in theory. So he's afraid that the central bank will be in a position where they have to make trade offs. So he has a tendency to act. So he's very much, basically, even though he's been asked this many times, just kind of sitting there and waiting, seeing the hard data. So it looks like he's committing to being late and he's just not sure what to do. So it looks like we're not really going to get anything from the Fed until we see some big cracks show up in the labor market.

再次强调，这里存在权衡问题。提高利率可以降低通货膨胀，但理论上会导致失业情况恶化。而如果降低利率以降低失业率，理论上会导致通货膨胀上升。因此，他担心中央银行将面临需要做出权衡的局面。他倾向于采取行动，但即便被多次问及此事，他基本上只是静观其变，等待更明确的数据。因此看来，他是倾向于延后行动，因为他不确定该如何应对。所以，在劳动力市场出现明显问题之前，我们可能不会从美联储那里看到任何新的措施。

Now we didn't get that this month. It's possible we could have more cracks next month or even a month or even in a couple months because we do see unemployment rate. Well, the labor market, showing some cracks, you see that in the unemployment claims, continuing claims elevated a little bit. You also see anecdotally that there are a lot of companies laying off workers. So for the moment, the Fed is going to be out of the picture. It's all about the White House. So I would say ignore the Fed for now and just focus on what the President is saying. All right, so that's all I prepared and I'll be back on Saturday.

现在我们这个月没有达到预期。下个月甚至几个月后可能会出现更多的问题，因为我们观察到失业率和就业市场开始出现一些问题。失业救济申请数量略有上升，你也会发现其实有很多公司在裁员。因此，目前美联储的影响会相对较小，关键在于白宫的举措。所以我建议暂时不要关注美联储，而是关注总统的讲话。好的，这是我准备的全部内容，我会在星期六回来。