Federal Reserve's Moussallem signals dovish stance: Strong tailwind factors will drive economic growth

In his recent speech, Federal Reserve’s Moussallem indicated that strong tailwinds, including fiscal policy and the lagged effects of rate cuts, will drive economic growth. This statement contrasts sharply with the hawkish stance released earlier today by Fed’s Williams, reflecting an increasing divergence within the Fed regarding economic outlook and policy path. Meanwhile, the US December CPI data was released tonight at 21:30, and combined with the intensive speeches from multiple Fed officials, market expectations for the future pace of rate cuts are being readjusted.

Moussallem’s Optimistic Signal

The specific meaning of tailwinds

Two major tailwinds emphasized by Moussallem worth noting:

• Fiscal Policy Support: Refers to the stimulative effect of government spending and tax policies on the economy; current US fiscal measures are still in effect
• Lagged Effects of Rate Cuts: The transmission of last year’s Fed rate cuts to the real economy has not yet fully materialized, and this effect will continue to support economic growth

According to Moussallem’s logic, the combination of these two factors is sufficient to sustain economic growth momentum through 2026.

The deeper implications of policy signals

What does Moussallem’s statement imply? Based on his wording, he emphasizes that the economy has enough growth drivers, which means:

• There is no need to rush into large rate cuts to stimulate the economy
• The Fed may adopt a more cautious pace of rate reductions
• Inflationary pressures exist, but the economic fundamentals remain sufficiently robust

This attitude is relatively moderate, neither fully hawkish with “maintaining high interest rates” nor dovish with “accelerating rate cuts,” but rather a balanced stance.

Internal Fed Policy Divergence

Williams’ hawkish stance

Compared to Moussallem’s relatively optimistic outlook, Fed’s New York President Williams stated in his speech this morning (07:00 Beijing time) that under current economic conditions, there is no reason to cut rates in the short term, which is a typical hawkish signal.

Comparison of the positions of two senior Fed officials:

The logic behind the divergence

This divergence is not accidental. There are indeed differences within the Fed regarding economic outlook:

• Hawkish camp: Believes inflation is sticky, the economy is resilient enough, and there is no need to rush rate cuts
• Relatively dovish: Believes growth momentum is sufficient, and policy can be adjusted gradually

This internal debate is actually healthy, reflecting the Fed’s cautious attitude amid a complex economic environment.

Market Impact and Follow-up Focus

The role of CPI data

The US December CPI data released tonight at 21:30 is a key reference. If the data shows easing inflation pressures, it will support Moussallem’s optimistic outlook; if it exceeds expectations, it may reinforce Williams’ hawkish stance.

Implications for risk assets

This series of speeches and data will influence risk assets such as cryptocurrencies and stocks in the following ways:

1. If rate cut expectations rise (dovish dominance) → bullish for Bitcoin, Ethereum, and other risk assets
2. If high interest rate expectations persist (hawkish dominance) → risk assets may face pressure
3. If the Fed’s stance remains ambiguous (both camps coexist) → market volatility increases, direction uncertain

Summary

The tailwinds emphasized by Moussallem indicate the Fed’s optimistic attitude toward economic growth prospects, but this does not mean rate cuts are imminent. Compared to Williams’ hawkish stance, there is a subtle policy shift within the Fed. The key points to watch moving forward are: actual US economic data, the real trend of inflation, and the Fed’s final decision at the next FOMC meeting. During this period of uncertainty, market volatility may remain elevated, and investors should closely monitor subsequent statements from Fed officials and economic data releases.