Powell's speech this time was as hard as iron! US stocks crashed directly, with the S&P falling over 2%, the entire market down over 3%, the dollar index plummeting, and the ten-year Treasury yield also declining. What's going on? Powell sent a super hawkish signal, and the easing policy is completely out of the question!
He said tariffs push up inflation, and the impact might last longer; with high inflation, there’s no way to cut interest rates. He also emphasized that the Federal Reserve is only concerned with letting inflation rise as a 'one-time' event and will never allow it to turn into a long-term crisis. What he means is: I won't clean up the mess caused by tariffs disrupting the market; I only care about inflation, and as for US stocks and bonds? You’re on your own!
The market originally hoped that Biden could pressure Powell into compromise, but Powell is determined not to cut interest rates, with March PCE at 2.6%, still above the 2% target, and economic growth slowing does not stimulate the economy. There might only be hope for rate cuts by the end of the year. This guy clearly intends to go all the way; he'd rather retire and be criticized than back down!
