Powell: Don't blame me, blame Trump! High interest rates + stagflation expectations, the market faces short-term setbacks——
The market fluctuated wildly last night in response to Powell's remarks——
What Powell mainly expressed last night was one point: I want to shift the blame, don't blame me, Trump changes his stance every day, back and forth.
Currently, tariffs will raise inflation and suppress growth, potentially leading to stagflation. In such a highly uncertain situation, the Federal Reserve will maintain high interest rates and will not consider cutting rates for now, even if the market declines, they will not intervene to support it.
Key points from the speech:
- Don't expect the Federal Reserve to intervene to support the market:
Trump's daily changes remind us that we should not expect the Federal Reserve to act as it has in the past by immediately supporting the market during declines.
- The Federal Reserve will not be influenced by political pressure:
Regardless of elections or changes in the political situation, the Federal Reserve will maintain its policy independence.
- If there is a shortage of dollars, the Federal Reserve is prepared to provide dollar liquidity to global central banks:
But currently, there is no large-scale dollar shortage.
- It is not yet time to stop balance sheet reduction:
This indicates that the Federal Reserve is still conducting QT (quantitative tightening), and the liquidity environment continues to tighten.
- The dual mandate of the Federal Reserve (maximum employment and price stability) has not yet shown contradictions:
However, there is a warning that unemployment and inflation may rise simultaneously in the future, making the situation more complex.
- Supply chain disruptions may lead to prolonged inflationary pressures:
Current external factors affect the persistence of inflation, and the Federal Reserve still needs to be cautious.
- It is expected that interest rates will deviate from the established target this year, and it may take until next year to realign with the target:
This means that there will not be an easy rate cut in the short term, and the policy will remain tight.
- It is expected that there will be "partial easing" of bank regulations related to cryptocurrencies:
This may release a small positive signal, benefiting the digital asset industry.
- Cryptocurrencies are gradually becoming mainstream:
Establishing a legal framework for stablecoins is considered a reasonable and positive approach.
My view——
Personally, I think Powell's remarks about Trump this time are classic. The current market uncertainty is high, and all assets will not perform well; everyone can only wait and see.
In the short term, market sentiment is frustrated, and risk assets are under pressure; but in the long term, the gradual clarification of the regulatory framework and the trend of cryptocurrency mainstreaming may bring new growth momentum to the market.
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