On October 30 , Trump stated on social media that under his administration, inflation had fallen significantly, and household and business incomes had risen substantially, declaring that "America's golden age has arrived." However, the Federal Reserve's view clearly contradicts this. The Federal Reserve explicitly stated in its October 28 FOMC statement that inflation remains high. At the post-meeting press conference, Warsh pointed out that Americans have faced inflation exceeding the Fed's target for nearly six consecutive years, and that current inflation remains excessive. Furthermore, recent increases in energy and related prices make it the Fed's responsibility to bring inflation back to the target. The FOMC minutes revealed several factors driving up prices, including the lagged effects of past tariffs, geopolitical tensions pushing up energy and raw material costs, and the AI boom leading to higher prices for consumer technology products. Regarding monetary policy, the Fed decided on October 28 to maintain the federal funds rate at 3.75%-4%. The committee stated that it needs to continue gathering more information before deciding on an appropriate policy stance to ensure inflation falls back to the 2% target in a timely manner, and reiterated the Fed's commitment to price stability. In the market, US stocks have performed well overall this year: the S&P 500 has risen 12.57%, the Nasdaq Composite Index has risen 12.69%, and the Dow Jones Industrial Average has risen 8.19%. However, following the interest rate decision, ETFs tracking the three major indices collectively closed lower on Thursday. SPY fell 0.38% to $769.36, QQQ fell 1.42% to $715.34, and DIA fell 0.37% to $522.73. In pre-market trading on Friday, SPY fell another 1.04%, QQQ dropped 2.60%, and DIA declined slightly by 0.09%. Following the policy statement, the U.S. Bureau of Labor Statistics released the third-quarter Employment Cost Index (ECI), providing new evidence for the wage inflation chain. In the 12 months ending in September, the ECI rose 3.4% year-on-year and 0.8% quarter-on-quarter, indicating that wage cost growth has largely stabilized and is not currently the main driver of broad inflation. Civilian workers' wages fell slightly to 0.7% month-on-month and 3.1% year-on-year, the lowest since 2021. After adjusting for inflation, overall compensation declined by 0.4% year-on-year, and wages declined by 0.6% year-on-year, meaning workers' real income lagged behind price increases. Pressure on the welfare front is rising, with private sector healthcare benefit costs climbing to 6.4% year-on-year, the highest since the end of 2025. The US job market has been generally stable this year, with limited layoffs, a relatively slow hiring pace, and job growth largely matching labor supply, resulting in limited changes in the unemployment rate. Warsh also noted after the meeting that employment has kept pace with labor force expansion, but inflation remains high. This ECI is only a preliminary indicator; investors should focus on the full suite of US employment data to be released next week, from ADP and initial jobless claims to Friday's non-farm payroll report, to fully verify the resilience of the labor market and wage stickiness, thereby judging the Fed's subsequent policy inclinations. Next week, the Bureau of Labor Statistics will release the October non-farm payroll report, providing a new round of complete data on hiring, unemployment, and wages.

Key Observations

A clear divergence has emerged between political narratives and central bank policy frameworks: during the election cycle, Trump emphasized improved inflation and rising incomes, while the Federal Reserve anchored its policy towards sticky, medium- to long-term inflation, with energy, tariffs, and AI capital expenditures remaining persistent disruptive factors. While the slowdown in nominal wage growth and the weakening of real wages have temporarily mitigated the risk of a wage-price spiral, rising healthcare and benefit costs and a rebound in energy prices remain potential concerns. Next Monday's full set of employment data will be a key validation point; if employment is strong and wages rebound, the market will reprice the likelihood of further interest rate hikes.