Powell cleverly applied the technique of "expectation management" and performed a perfect Tai Chi. Another change from the unfriendly comments about encryption in December is to actively embrace cryptocurrency (under the premise of regulatory compliance). Gradually stabilize the market amidst fluctuations. Specifically, the following points are particularly crucial: one ️⃣ Changes in the Statement of Interest Rate Resolution In this interest rate decision statement, the Federal Reserve removed the previous statement that "inflation has made progress towards the committee's 2% target" and replaced it with "inflation levels may still be slightly higher". This change immediately triggered market tension, especially as inflation expectations remain high, and investors are generally concerned that the Federal Reserve will adopt a more hawkish interest rate hike policy to address inflation. Combined with Nick's tweet suggesting that tariffs may lead to rising inflation, the market has further intensified panic about the future policy direction of the Federal Reserve, and it is widely believed that Powell's remarks may be very tough. two ️⃣ Powell's speech reverses market expectations However, Powell did not take the tough stance expected by the market in the subsequent press conference, but instead gave a more moderate statement. He stated that although inflation remains slightly high, overall, long-term inflation expectations are stable and making progress. This eased the market's tension as Powell did not emphasize the need to excessively tighten the economy through interest rate hikes to curb inflation. In terms of the job market, Powell believes that the current job market is within a reasonable range and there is no need to further weaken the labor market to achieve inflation targets. This means that the Federal Reserve does not want to forcefully achieve inflation control by suppressing employment, avoiding the risks of unemployment and economic recession that may arise from excessive tightening. This statement makes the market feel more at ease, as it indicates that the Federal Reserve is concerned about the healthy development of the economy, rather than simply inflation targets. three ️⃣ Response to Trump's Policies Powell mentioned at the press conference that the Federal Reserve has always been "aligned" with government policies, but regarding the Trump administration's policy changes in finance, regulation, immigration, and tariffs, Powell stated that he wants to observe the development of the situation. He used the term 'alignment' here, cleverly indicating that the Federal Reserve will align its decisions with other government policies, but did not explicitly state that it will be directly subject to executive orders. This leaves the market with flexibility, and investors are not overly concerned about the possibility of government intervention policies. four ️⃣ Outlook for future policies In the discussion on the future policy path, Powell emphasized that the Federal Reserve is not in a hurry to adjust interest rates, and future policy adjustments will be gradually made based on economic data. He specifically pointed out that there is no need to wait until inflation drops to 2% before cutting interest rates again, but more economic progress needs to be seen. This statement made the market understand that the Federal Reserve's decisions are flexible and will not take overly aggressive actions, but rely on feedback from actual data. Powell's cautious attitude indicates that the Federal Reserve will respond flexibly based on economic conditions, rather than rigidly implementing a certain policy. five ️⃣ Opinions on Cryptocurrency The biggest highlight is that Powell's attitude towards cryptocurrency has changed from his empty remarks in December. He believes that establishing stronger regulatory mechanisms in the field of encryption is beneficial, especially in terms of banks providing services to compliant customers. As long as risks can be effectively managed, banks can provide services to encrypted customers. Compared to its conservative stance in the past, this statement indicates that the Federal Reserve's attitude towards cryptocurrency has become more tolerant, and has also brought some positive signals to the cryptocurrency industry. Summary: Overall, Powell's "expectation management" strategy in this speech was very successful. He created hawkish expectations in the statement and then used gentle language to restore stability to the market from panic. This operation not only stabilizes market sentiment, but also provides more flexibility for future policy paths. Powell was neither overly tough nor completely dovish, but maintained a relatively balanced stance, sending clear signals to investors. Through this market operation, it can be seen that the Federal Reserve has demonstrated a high degree of flexibility and thoughtful strategy in the implementation of monetary policy, which provides stable expectations for future economic development. 🧐