Powell made hawkish remarks, and the three major U.S. stock indexes rose and fell

At 3:00 a.m. on January 27, Beijing time, the Federal Open Market Committee announced that it would maintain the target range of the federal funds rate at 0-0.25%. The Fed also said that due to the inflation rate being well above 2% and the strong labor market, it is expected that the target range of the federal funds rate will be appropriately raised soon, and it has decided to continue to reduce the pace of net asset purchases each month and stop purchases in early March. Starting in February, it will increase its holdings of U.S. Treasuries by at least $20 billion per month and its holdings of agency mortgage-backed securities by at least $10 billion per month. Affected by Powell's hawkish remarks, the three major U.S. stock indexes rose and fell, closing mixed. The Dow fell 0.38%, after rising by about 1.5%; the S&P 500 fell 0.15%, after rising by more than 2.2%; and the Nasdaq rose 0.02%, after rising by about 3.4%. Affected by this, cryptocurrencies also fell.

Fed Chairman Powell said at a press conference after the interest rate decision that the Fed's policy has been adapting to the changing economic environment against the backdrop of rising inflation and a strong labor market, and will continue to do so. Powell further pointed out that due to the significant progress seen in the labor market and inflation far above the long-term target of 2%, the economy no longer needs continued monetary policy support. This is why the Fed is gradually stopping asset purchases and why it is expected to raise the target range of the federal funds rate soon.
Powell explained that in order to more clearly articulate the approach to reducing the size of the Federal Reserve's balance sheet, the Committee (FOMC) today issued a set of principles that lay the foundation for future decisions. These high-level principles clarify that the federal funds rate is the Federal Reserve's primary means of adjusting monetary policy, and that the reduction of the balance sheet will occur after the process of raising interest rates begins. Over time, the reduction will occur in a predictable manner, primarily through adjustments to reinvestments so that securities are reduced from the Federal Reserve's balance sheet. Over time, the Federal Reserve intends to hold the number of securities required for ample reserves, and in the long run, the Federal Reserve envisions holding primarily U.S. Treasury securities.
Powell said the committee has not yet made a decision on the specific timing, pace or other details of reducing the balance sheet and will discuss these matters at upcoming meetings and provide more information when appropriate.
It is worth noting that the next Federal Reserve interest rate meeting will be held on March 15-16.