Powell's statement that "the policy interest rate is moderately tight" is essentially a beautifully packaged wait-and-see attitude. The Federal Reserve is currently in a dilemma: on one hand, inflation is slowly heating up like a "frog in boiling water," while on the other hand, it must guard against a sudden "cliff-like drop" in the job market, carefully balancing like walking on a knife's edge.
For us investors, the next three months require us to be smart; we need to buy some inflation-resistant assets, such as energy and gold; we also need to allocate some stable sectors, like utilities and high-dividend stocks, which are defensive in nature. After all, the current policy direction is swinging left and right, and we must seize those structural opportunities amid this fluctuation.
Powell's real test lies in his ability to strike the right balance before stepping down in May next year, ensuring that what is now called "moderate tightening" does not end up becoming "too harsh a tightening," resulting in a poor historical evaluation.
