Powell's Dilemma: Interpreting the Recent Federal Reserve Interest Rate Decision

The market widely expects that the Federal Reserve will maintain the current interest rate range of 4.25%-4.5%. This expectation reflects the robustness of current economic data and the uncertainty surrounding tariff policies. Specifically:

- Economic data has support: The U.S. PCE price index rose 2.3% year-on-year in March, the lowest level since last fall; the core PCE price index increased by 2.6% year-on-year, down from the previous value of 2.8%, with a month-on-month change of 0, indicating that inflationary pressures are gradually easing. Meanwhile, the April non-farm payroll report showed an addition of 177,000 jobs, exceeding market expectations, with the unemployment rate stable at 4.2% and the labor force participation rate slightly rising to 62.6%. The resilience of the labor market has reduced the pressure on the Federal Reserve to cut interest rates immediately.

- Tariff policies are variable: Trump has implemented several tariff measures since February 2025, which is the core of current market uncertainty. Powell warned that tariffs could trigger “stagflation,” and the President of the International Monetary Fund pointed out that Trump's tariffs could shrink global trade, with the U.S. economic growth forecast for 2025 being downgraded from 2.3% to 1%. To address potential risks, the Federal Reserve may continue to keep interest rates unchanged until the impacts of tariff policies become clearer.

Additionally, the market is highly focused on Powell's press conference following the interest rate decision. Bloomberg Economic Review expects Powell to emphasize the Federal Reserve's commitment to price stability in a hawkish tone, reiterate the independence of the Federal Reserve, and counter the political pressure exerted by the White House, which may further intensify conflicts with Trump. #BTC #ETH #美联储FOMC会议 $BTC $ETH