Powell remained tight-lipped about quickly cutting rates yesterday, not ruling out any possibilities. Can the senators tonight squeeze more policy clues from him?
Alright, crypto friends! Hold on tight, let’s talk about Powell's 'Tai Chi push hands' in Congress these past couple of days—he has the rate cut button right in front of him, but he refuses to press it and instead shifts the blame to Trump's tariffs! This is really something to watch. 'Powell holds the power to cut rates, facing the 'pressure' from Congress and the market's expectations, he stubbornly welded the words 'let's wait and see' to his face—what's the rush? Isn't the economy doing quite well?'
I was sitting there with my small stool, watching. Those congressmen, especially those pushed by Trump to cut rates, were practically throwing the question 'when will you cut rates?' at Powell in various ways! And guess what Uncle Powell said? His original words were something like: 'If inflation really calms down, we will cut rates sooner or later... but not now! What's the rush? The economy is still as strong as an ox!'
Oh my! The phrase 'sooner or later' is so quintessential, it’s similar to what we say in the crypto world: 'Hold on, the future is promising'—sounds great, but it just doesn’t give a specific date! Last week they didn’t cut rates at the meeting, and this week the boss went to Congress still holding this tone.
What’s the funniest part? He directly shifted the blame to Trump's tariff policy! Uncle Powell said seriously: 'Old Trump, your tariffs are raised today and lowered tomorrow, making us anxious and completely unable to see whether the future economy is going up or down!' The implication is: with so much uncertainty, how can we dare to easily change interest rates? What if we cut wrong and inflation rises again, who will take responsibility? Although he also admitted that some recent data does seem to support rate cuts, he emphasized that this data is 'after the fact'! What he is more worried about is that many economists predict that inflation might 'rise significantly' this year due to tariffs! He said: 'We can't pretend not to see this, dear friends!'
Market reactions are also very real! Powell's dovish stance caused U.S. Treasury yields and the dollar to fall sharply. Traders are crunching the numbers, thinking the possibility of two rate cuts before the end of the year has increased slightly. Why? Because they sense from Uncle Powell's words that the impact of tariffs on inflation may not be as severe as previously thought? Plus, consumer confidence data is also weak, further supporting rate cut expectations.
But the Federal Reserve is not a monolith! Don't forget, even the Fed's own officials believe there should be two rate cuts before the end of the year. Not to mention board members Waller and Bowman, who have recently hinted that a rate cut could happen as early as July! This is clearly contrary to Powell's 'no rush' rhetoric today! The mainstream opinion among Wall Street analysts now is that: the possibility of a rate cut in September is the highest, but it's far from certain.
The most exciting part is coming! Powell is 'calm as a mountain' while Trump is 'furious'! The understanding king started blasting on social media early in the morning, directly naming 'the late Powell', calling him a 'very stupid and stubborn person', and saying 'I hope Congress can give him a good beating' and 'for many years to come, we will have to pay for his incompetence'! The tension is palpable even through the screen! Why is he so angry? Because he feels that the Fed's stubbornness in not cutting rates keeps the borrowing costs high, blocking his 'grand ambitions'!
Back to tariffs, Powell himself also admitted that this thing is like a pot of boiling oil, which could explode at any time or could cool down slowly. He said whether it eventually leads to sustained inflation depends on how severe the tariffs are, how long it takes to transmit to prices, and whether the public's long-term inflation expectations are stable. The key is, no one knows the answer now! Uncle Powell's original words were very sincere: 'There really isn't any historical homework we can copy here! We are also feeling our way across the river, learning as we go!' He even said that if it turns out the impact of tariffs is less than expected, that would be 'very important' for policy!
So, dear crypto friends, the key point is coming:
Rate cut expectations still exist, but Powell has his finger on the 'starting gun', July is uncertain, and September is the focal point! There is a huge space for strategic games between market expectations and the Fed's actions!
Trump's tariff policy has become the biggest 'scapegoat' and a source of uncertainty! How this evolves directly relates to when and how quickly the Fed will pull the trigger on rate cuts!
There are also divisions within the Fed! Will Waller, Bowman, and these 'doves among hawks' put more pressure on Powell? Worth keeping an eye on!
Inflation data is crucial! Powell says there's no rush, but his body is very honest—he's closely watching the data, especially how tariffs will actually impact inflation. Any inflation data that exceeds expectations could trigger a market explosion!
Everyone, this is like the 'Sword of Damocles' hanging over our crypto world! Rate cut expectations are the fuel, and uncertainty is the thunder. How long can Powell's 'Tai Chi' last? Will Trump's 'Twitter cannon' successfully pressure him? How will the antagonism between inflation and tariffs play out?
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