My feeling from this meeting is that on the surface it seems dovish, but upon closer inspection, it feels somewhat hawkish!

1. The impact of tariffs on inflation is slow; the Federal Reserve needs more time to observe the effect of tariffs on inflation.

2. Whether the impact of tariffs ultimately passes on to merchants or consumers requires more observation. The implication is that the current economy will not experience a dramatic downturn, but it does not mean that the future will be the same.

3. Powell clearly stated that maintaining high interest rates is more beneficial for suppressing inflation and emphasized that the duration of high rates will be longer.

4. Powell believes that the current interest rates are more favorable for the Federal Reserve, and in case of an emergency, the Fed is fully capable of responding.

Overall, the message is to remain steady. Importantly, the key dot plot for interest rate expectations remains unchanged from the last meeting, still anticipating two 25 basis point rate cuts, but the dot plot shows an increase in the number of those expecting no rate cuts from four to seven, with eight predicting two rate cuts.

Powell’s remarks continue the previous tone of uncertainty and caution; however, he explicitly stated that the impact of tariffs on inflation may be more persistent, expecting some degree of inflationary pressure to rise in the coming months (which is clearer and more definite than previous statements). He also noted that the overall impact of tariffs is highly uncertain regarding how large it will be, how long it will last, and when it will fully materialize. He expressed satisfaction with the state of the labor market, stating, "The labor market is not calling for a rate cut."

So why is the market not reacting much despite a hawkish stance?

First, the consensus for no rate cut in June had already formed at the beginning of the month, and the market had an expectation. Additionally, Trump was speaking simultaneously with Powell, and his comments regarding the Iran issue led the market to temporarily detach from Powell's statements.

As for July and August, I will continue with my previous viewpoint. The known months when a rate cut might occur are September, so at least the turbulence in between will not be easy to navigate. I won't predict how much it will drop, but to say it will reach a new high is basically impossible.

Actually, the earlier mentioned difficulties in June could accelerate after the 20th, with bottom-fishing opportunities in August also extending the prediction timeline for rate cuts, barring any sudden events, that's most likely how it will be.

Still, that previous statement holds: just refer to suggestions #我的交易风格 .