During Powell's congressional hearing in the evening, I personally feel that the most critical point is that it can be said he is playing Taiji, but it also frames three paths for the subsequent Fed decisions: if inflation is not as strong as expected or the labor market is weak, interest rates could be lowered early; however, if inflation and the labor market remain strong, interest rates could be lowered later.

It requires time to observe, and it looks like the inflation and labor conditions for the two months of July and August will be crucial. Previously, it was thought that with tariffs settling at just over 10%, inflation would have a one-time effect (which wouldn’t last long), and in the past couple of days, the biggest impact of the ceasefire in Israel has been the decline in oil prices, which weakens the push for inflation in June.

I previously estimated that September was more likely, so let’s see how accurate that prediction is.