Federal Reserve 'Hawkish Betrayal': Why Did Trump-Appointed Officials Switch to Support Rate Cuts?
I. Power Undercover: Presidential Will Torn Apart Central Bank's Iron Law
Two Federal Reserve governors nominated during Trump’s term—Waller and Bowman—suddenly shifted to a dovish stance, simultaneously supporting a rate cut in July. This is no coincidence:
Bowman (Vice Chair for Supervision) was previously known as an 'inflation fighter,' but now claims that 'the vulnerabilities in the labor market have surpassed the risks of inflation.'
Waller (a popular candidate for the next chairman) bluntly stated, 'There’s no need to wait for data to worsen; we should cut rates now.'
Behind this unusual behavior lies Trump’s six-month-long high-pressure campaign against the Federal Reserve: demanding a sharp drop in interest rates from 4.3% to 1%-2%, claiming it would save trillions in debt interest each year.
II. Data Maze: Three Major Contradictions in the Logic for Rate Cuts
Inflation Illusion: Despite core PCE still being above 3%, Bowman emphasizes that 'the tariff shock has been absorbed by inventory buffers,' while Waller asserts that 'inflation is just a temporary disturbance.'
Employment Fog: The unemployment rate remains at a low 4.2%, but the unemployment rate for recent graduates has surged, and leading indicators like reduced work hours are flashing yellow lights.
Debt Compulsion: The U.S. government pays $65 billion in interest each month, exceeding defense spending and creating a fiscal black hole; a 1% rate cut would save $200 billion in fiscal space annually.
III. Market Games: The Expectation Gap Between Hawks and Lambs
U.S. Stock Market Frenzy: The S&P 500 rose 2.3% in three days, with tech stocks betting on a return of liquidity easing.
U.S. Treasury Moves: The 10-year yield plummeted to 4.32%, reaching a three-month low, with interest rate futures pricing in a 78% probability of a rate cut in September.
Crypto Circle Ambush: BTC broke through the key resistance of $68,000, with leveraged funds building long positions in interest-sensitive assets.
IV. Ultimate Scenario: Powell's 'Death Cross'
The July FOMC meeting (29-30) will become the most divided decision in the Federal Reserve's 112-year history:
If they compromise and cut rates, the risk of inflation expectations becoming unanchored will soar, and the credibility of the dollar will suffer.
If they stick to a hawkish stance, the liquidity squeeze in U.S. stocks may trigger a chain reaction of debt crises.
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