Foreign media: Citadel Securities' latest comment states that the Federal Reserve, under the leadership of the new Chairman, Walsh, has moved from a policy style that has focused on inertia and forward-looking communication to a more proactive approach. In the Agency ' s view, the market should no longer understand the Fed in the light of the previously liberal framework of communication, and the next step could be a higher interest rate.

The July meeting was considered a potential for action

Citadel noted that the June meeting, while maintaining the same interest rates, had been followed by a clear bias. The statement reaffirmed that price stability would be achieved, while raising the core PCE inflation forecast for the next two years, leading to a divergence in the market's interpretation of the term “silent”.

The Agency classified the July meeting as a “active meeting” and considered that the Federal Reserve could act directly at that time. The baseline scenario is an increase of 25 basis points in September, December and March 2027, respectively, totalling three times.

  • Core PCE projections for 2026 rise to 3.3%
  • Core PCE projections for 2027 rise to 2.5%
  • Baseline scenario is three interest increases for the next two years

Policy thinking moves from inertia to initiative

According to the article, this round of changes is not only reflected in the interest rate path but also in the way decisions are made. According to Citadel, the Federal Reserve, led by Walsh, placed more emphasis on the early processing of inflation than on the stabilization of market expectations through long-term forecasting.

According to their calculations, policy interest rates should be between 4.25 per cent and 4.50 per cent if 3 per cent is used as a neutral interest rate and in the light of current inflation deviations from the target. This level corresponds roughly to the result of three interest increases.

Citadel also mentioned that if the Fed were to adopt early austerity measures, the risk of inflation going out of control would decrease; and that, once price pressures had receded, subsequent policies could have shifted more quickly. This is central to its view of the multi-active Fed response capacity.

United States dollar and interest rate curve or impact

At the market level, Citadel predicts that a stronger and more proactive position of the Federal Reserve will be conducive to the dollar performance and may also reduce the concern that long-term inflation is out of control. In the interest rate market, there is a potential for further flattening the yield curve.

It was also mentioned that the rate of short-end US debt volatility could increase. This is due to the fact that the Federal Reserve has reduced its advance communication on the way forward and that there is greater uncertainty about short-term meetings. In contrast, the extreme risk of long-term United States debt could decline, as markets would be more convinced of the Fed ' s willingness to suppress inflation in a timely manner.

With regard to the stock market, the article argues that the hawks' policy itself will continue to bring pressure, but if the Fed moves earlier, the risk of being forced to increase significantly in the future will decline. Under this logic, risk assets may be subject to more direct pressures, but the path may be more manageable.