Chen Dawei: The Fed is more worried about overheating than stalling – Economy – Ming Pao

As soon as the US inflation data came out last week, as expected, both February CPI (Consumer Price Index) and Core CPI (Core CPI) were higher than expected, rising by 3.2% and 3.8% respectively (expected to be 3.1%). This has raised concerns about inflationary pressures and posed new challenges for the Federal Reserve.

The Federal Reserve and Inflationary Pressures

Chen Dawei pointed out that when facing inflationary pressure, the Fed should pay more attention to the possibility of overheating instead of worrying too much about stalling. An overheated economy may lead to further increases in inflation, thereby affecting the stability of the entire economic system.

Inflation data analysis

Judging from February CPI and Core CPI data, the rise in consumer price index was mainly affected by energy and food prices. This shows that inflationary pressure mainly comes from supply chain problems and international market fluctuations.

Fed response strategy

Chen Dawei suggested that the Federal Reserve should remain vigilant and adjust monetary policy in a timely manner to avoid economic overheating. At the same time, supervision should be strengthened to prevent the emergence of financial risks and maintain economic stability and sustainable development.

Market reaction and outlook

The market's reaction to the inflation data was mixed, with investors concerned about future economic trends. However, Chen Dawei believes that as long as the Federal Reserve can respond in a timely manner and maintain economic stability, short-term fluctuations will not have much impact on long-term investment.