The core message of the overall speech is to convey one message: the current economic difficulties and policy uncertainties are largely attributed to external factors (especially tariffs).
Yes, it is talking about Trump.
The Federal Reserve tends to maintain high interest rates, postpone rate cuts, and clearly states that it will not easily intervene in the market.
1. Macroeconomic aspects: high interest rates, tightening liquidity.
Powell emphasizes: frequently changing tariff policies drive up inflation and suppress growth, potentially leading to stagflation. Under this high uncertainty, the Federal Reserve chooses to remain inactive.
Subtext: Don't blame me for raising interest rates for too long; blame the chaotic policy environment!
'Hawkish' stance is firm:
Refuse to intervene in the market, explicitly stating not to expect the Federal Reserve to intervene immediately as it did in the past when the market falls.
Rate cut 'let's wait and see': there will not be an easy rate cut in the short term, interest rates may deviate from the target, and policies will maintain a tight stance.
Continue to shrink the balance sheet (QT): quantitative tightening is still ongoing, which means continued extraction from the market, not beneficial for the liquidity-dependent crypto market.
Prioritizing fighting inflation:
Core objective: controlling inflation takes precedence over job preservation, even if it may face a complex situation of rising unemployment and inflation in the future.
Data: although inflation has fallen from its peak, progress is slow and remains above the 2% target. Overall PCE year-on-year is expected to be about 2.3% in March, and core PCE year-on-year is expected to be about 2.6%.
Global factors: supply chain issues, tariffs, and other external factors may lead to more persistent inflation.
Global central bank support: if there is an extreme shortage of dollars, the Federal Reserve is prepared to provide liquidity (such as central bank swaps), but this is more about preventing systemic risk rather than actively injecting liquidity.
2. Regarding the crypto market: regulations are clear, which is beneficial for stablecoins.
Official recognition: once again emphasizes that cryptocurrencies (especially stablecoins) are gradually becoming mainstream.
Support for legislation: believes establishing a legal framework for stablecoins is 'reasonable and positive'.
Good for institutional channels: it is expected that regulations concerning banks serving crypto clients will loosen, which may allow traditional financial institutions (banks) to engage more deeply in the crypto market, such as providing custody, trading, and other services.
Is it good for BTC? Lowering the entry threshold for institutions constitutes a long-term benefit for BTC, which is viewed as an institutional-level asset.
Personal opinion/summary
The market reacted negatively to Powell's remarks, but upon closer examination of the content, he didn't say anything new, so I believe the market's reaction is exaggerated.
Powell's basic plan for the next steps is 'no comment', which is normal since the current policies of the U.S. government are still unclear, and the macro environment remains fragile.
