Fed Chair: Asset valuations are somewhat high at the moment, and money market funds are a weakness

The Paper's reporter Jiang Mengying

Powell

In the early morning of December 16, Beijing time, Fed Chairman Powell commented on a number of hot spots of market concern at a press conference after the interest rate decision.

When asked about cryptocurrencies, Powell said he doesn't think it's a financial stability issue, but they're really dangerous because they don't have any assets behind them, which is a big problem for consumers. These are undoubtedly market developments that deserve attention, but they are not under the jurisdiction of the Federal Reserve. But when it comes to leverage, it's worth paying attention to.

Powell emphasized that asset valuations are one of four key areas of focus for the Fed when assessing financial stability risks, and current asset valuations are somewhat high. He also said that U.S. households are currently in good financial shape, but corporate debt is heavy, although the default rate of enterprises is low. Powell added that financial institutions have lower financing risks and low leverage, but the Fed sees money market funds as a weakness.

Regarding the Opmi-Kron variant that is currently sweeping the world, Powell believes that it poses a risk to economic growth, but it will not affect the Fed's plan to accelerate the reduction of debt purchases. Powell said: "It is indeed a fitting thing to end our debt reduction by a few months earlier, and Aumechon has little to do with it."

"There's a lot of uncertainty, which is why we call it risk in the statement or post-meeting statement," Powell said. The impact of Omikeron on the economy will depend on the extent to which it suppresses demand, not supply, and it is unclear how this variable will affect inflation, growth or employment. And as vaccination rates have risen, Americans have become more accustomed to the emergence of new variants of covid-19. Wave after wave, people are learning more and more to live in the midst of the epidemic. ”

Editor-in-Charge: Zheng Jingxin

Proofreader: Shi Gong