Powell is between a rock and a hard place:

His priority for years has been to reduce inflation to 2%. However, if he ends QT and begins to stimulate the markets with rate cuts or liquidity injections, that goal will fade away, but not only would he avoid a recession, we would likely enter a pretty strong rally.

On the other hand, if he remains firm in his strategy, a "soft landing" seems increasingly unlikely, especially with Trump pushing hard with his aggressive policy. If the economy goes into recession during his first year in office, he will not hesitate to blame the Biden administration.

The real dilemma is that if the Fed ignores inflation and adopts a premature expansionary policy, relief will be temporary: a "bread for today and hunger for tomorrow," as inflation would spike again, further complicating the long-term economic outlook. The Fed has insisted that it will be patient and wait for inflation to decrease sustainably before cutting rates, but market and government pressure could force its hand sooner than expected.

Powell faces a tough choice: maintain the tightening and risk an economic crisis or yield to political pressure and risk a new inflationary wave.