Stunning Reversal? Powell Refuses to Cut Interest Rates! US-China Rate Escape, Global Capital on the Verge of Collapse!
Powell is now in a dilemma—US prices are soaring, employment is booming, inflation is not decreasing, and he dares not ease interest rates. If he cuts, he fears prices will spiral out of control; if he doesn’t cut, he fears an economic collapse. He has become a 'gambler on a seesaw'.
Why is the Federal Reserve holding firm?
Inflation is still skyrocketing:
Egg prices up 58% year-on-year, rent rising over 8%, and the Federal Reserve's target is still 1 percentage point away, making it fundamentally cautious about taking action.
Job market is heating up:
Even factory cleaners can earn $25 per hour, companies are frantically competing for workers, wages are driving prices up in a vicious cycle.
If Powell eases now, he risks being labeled as the one who let 'inflation go out of control'. His term ends in May 2026, and in this year-plus, success or failure will determine his fate.
The US-China interest rate showdown is reaching a boiling point!
US benchmark interest rate 5.25%-5.5%, 10-year bonds 4.8%
China's LPR is only 3.45%, and 10-year government bonds are below 2.65%
This 2%+ interest rate differential acts like a magnet, attracting global capital toward US dollar assets.
The RMB continues to depreciate, capital is fleeing madly, and the People's Bank of China dares not easily loosen monetary policy. The 2024 wave of high-end restaurant closures in Shanghai is driven by capital outflow leading to a consumption breakdown.
Financial turbulence has fully erupted:
US stocks are overvalued, and tech stocks have severely shrunk.
The RMB has fallen below 7.26, hitting a two-and-a-half-year low.
Emerging markets are suffering severely: the Argentine peso plummeted 12%, and the Turkish lira has dropped 30% in a year.
Retail investor strategies:
Stay away from overvalued US stocks, don’t take the last baton.
Maintain RMB assets to prevent scrutiny over capital outflow.
Keep a close watch on policy turning points; if inflation breaks 3% or significant changes occur, it may be time to position for a rebound.
Conclusion:
The global interest rate game has entered a decisive moment. Will Powell end with a hawkish stance, or will he falter on the brink of economic collapse? In the US-China financial war, whoever lets go first will lose everything. The real storm has just begun.