Group 1 - The Federal Reserve is adjusting its overall policy framework to address significant changes in inflation and interest rate outlooks in the post-pandemic era [2] - The economic environment has drastically changed since the pandemic began in 2020, necessitating a reassessment of the existing policy framework [2] - The rise in "real" interest rates post-inflation indicates increased instability in future inflation, prompting the need for a policy framework adjustment [2] Group 2 - The evaluation of the policy framework is expected to be completed by August or September, with no immediate impact on current interest rate settings [3] - Investors are advised to closely monitor the specific details of the adjustments once they are disclosed [3] Group 3 - The core elements of the Federal Reserve's policy framework are likely to be reshaped, with a greater focus on monitoring and responding to inflation volatility [4] - The Federal Reserve may reconsider the coordination between monetary and fiscal policies to better stabilize economic growth and the job market [4] Group 4 - The adjustment of the Federal Reserve's policy framework could trigger a "butterfly effect" in global markets, impacting capital flow patterns and potentially leading to currency fluctuations and financial market volatility [6] - The changes in policy will reshape investment logic for global investors, affecting interest rates, exchange rates, and asset prices [6] - The Federal Reserve's response to the new economic conditions in the post-pandemic era will have profound implications for both the U.S. and global economies and financial markets [6]

Core Viewpoint - The Federal Reserve is adjusting its overall policy framework in response to significant changes in inflation and interest rate outlooks following the pandemic [1][3]. Group 1: Historical Context and Framework Review - The Federal Reserve's "consensus statement" was first formalized in 2012, outlining its long-term goals and monetary policy strategy, which has remained unchanged to date [3]. - The Federal Open Market Committee (FOMC) conducted its first public review of the consensus statement in 2019, committing to reassess the framework approximately every five years [3]. - Since 2020, the economic environment has changed significantly, prompting the Fed to evaluate its current framework, with results expected by August or September [3]. Group 2: Economic Conditions and Policy Implications - Post-pandemic, the rise in inflation-adjusted "real" interest rates may affect the components of the Fed's current framework [4]. - Higher real interest rates could indicate a greater likelihood of inflation instability compared to the 2010s, suggesting a period of more frequent and prolonged supply shocks [4]. - The Fed is also considering improvements to its formal policy communication, particularly regarding forecasts and uncertainty [4]. Group 3: Interest Rate Outlook - The Fed maintained the federal funds rate target range at 4.25% to 4.5%, citing increased risks of rising unemployment and inflation [6]. - Recent data showed the Consumer Price Index (CPI) rose by 2.3% year-on-year in April, the lowest increase since early 2021, while the Personal Consumption Expenditures (PCE) index is expected to rise around 2.2% [6]. - Economists predict that the current moderation in inflation may not last, with expectations of price acceleration due to the impact of import tariffs [6].