Fed Chair Powell's speech at the Jackson Hole central bank annual meeting in his final term sent global markets into a state of tension—'Risk balance is changing.' Behind this statement lies the complex situation facing the US economy: inflation rising again, a sharp drop in employment growth, and tariff policies pushing up prices, putting the Fed in an unprecedented dilemma.

📉 Key data lights up red

Employment growth has plummeted: an average of only 35,000 in July, less than 1/5 of the 2024 level

Core inflation continues to rise: it has reached 2.9%, far exceeding the 2% policy target

Tariff effects are becoming apparent: commodity prices increased by 1.1%, consumers are beginning to feel the pressure

Powell admits for the first time that the Fed is facing a 'challenging situation'—inflation risks are rising, while employment risks are declining. Interest rate hikes may harm employment, while rate cuts could boost inflation, leaving monetary policy in a dilemma.

💸 A liquidity turning point is approaching; how will the crypto market respond?
Powell mentioned that 'risk balance is changing,' which may indicate that the liquidity environment most closely watched by the crypto market is about to shift. Over the past two years, crypto assets have been highly dependent on US dollar liquidity and US Treasury yields, while now the Fed's policy space is narrowing—there is limited room for rate hikes, and rate cuts are constrained by inflation.

The market is gradually realizing: uncertainty itself has become the new certainty. As a high-risk asset, the volatility of the crypto market may further intensify.

🔄 Major adjustments in the monetary policy framework
The Fed has revised its monetary policy framework for the first time since 2020, emphasizing the 'inclusiveness' of employment goals and policy flexibility. However, whether the new framework can address the current complex situation remains uncertain. For the crypto market, this means that fluctuations in market narratives and risk preferences will become more intense.

⚠️ Tariffs are reshaping the economy and markets
Powell acknowledged, 'Significantly increased tariffs are reshaping the global trading system,' and their impact on prices is 'clearly visible.' This is not only a description of economic reality but also a warning to policymakers. For cryptocurrency investors, this is also a reminder: every swing in macro policy could quickly transmit to risk assets.

🔮 The possibility of a rate cut in September remains uncertain; the market is holding its breath.
Although there are still expectations for a rate cut in September, Powell's speech indicates that this decision will be more difficult than before. In the cracks between inflation and employment, the Fed is searching for an untraveled path. And crypto assets may be assigned a new role on this uncharted road—hedging tools, safe-haven assets, or amplifiers of volatility? The answer may soon be revealed.

📌 Summary of key points

The Fed is facing dual pressures of inflation and employment, entering a dilemma stage;

The liquidity environment may shift, and volatility in the crypto market may further amplify;

Tariff policies continue to impact prices, and swings in macro policies exacerbate market uncertainty;

Whether there will be a rate cut in September remains variable, and the market needs to be prepared for both long and short positions.

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(This article is for reference only and does not constitute any investment advice)