After Powell spoke last night, the market believes that the probability of not lowering interest rates in July has risen to 81.4%. What key points did Powell mention last night? ① The U.S. is not currently in a recession, and changes in interest rates will depend on the direction of the economy. ② The vast majority of policymakers believe that lowering interest rates later this year is appropriate. The reason we are not lowering interest rates now is that both internal and external economic forecasts signal a significant rise in inflation this year. We must wait and observe; we are currently in this stage. There is no need to rush to act. It will not point to a specific month. ③ We expect to see significant impacts of tariffs on inflation in June, July, and August. ④ Our balance sheet still has some room for reduction, and we believe it can continue at the current pace for a while. Finally, when asked why not lower interest rates? Powell stated that the main reason is the uncertainty regarding the scale of inflation caused by tariffs and its potential persistence.

So, some people believe that there will definitely be a rate cut in July; I really don't understand where this certainty comes from.

Additionally, I took a look, and the probability of a 25 basis point rate cut in September has already reached 70.9%. This means that not lowering rates in July is likely a fact, and the market will now bet more on September. If that’s the case, the interim period will only involve adjustments. I personally expect hype around rate cut expectations to begin after August.

So July is likely to be a month of great turmoil.