The core of the Federal Reserve's game: Why does Powell prefer not to give a 'clear answer'?
The underlying game of the Federal Reserve's interest rate meeting: Why is Powell reluctant to provide a 'definitive answer'?
The crux of this week's Federal Reserve interest rate meeting, put simply, is the tug-of-war between 'policy balancing' and 'market expectation gap', which conceals two crucial layers of tension.
For Powell, the focus now is on tightening the 'expectation reins' rather than recklessly releasing 'easing signals'. If he explicitly states that interest rates will be lowered, it may seem to give the market clarity, but it could ignite overly optimistic sentiment—especially since there is still no consensus within the Federal Reserve regarding views on inflation and the economy. Prematurely setting the tone would only bind subsequent policy decisions. Therefore, he prefers to make 'vague statements', neither denying a rate cut nor specifying the timing, using this 'cautious balance' to stabilize market expectations.
However, the market is precisely looking for a 'clear roadmap', and has now formed two 'signal anchors': Powell's words influence short-term funding trends, while figures like Bullard, the 'shadow chairman', have already hinted at 'easing', serving as a reference for long-term expectations.
If Powell continues to 'play Tai Chi', the gap in market expectations is likely to trigger short-term volatility—funds want to chase the 'easing winds', yet fear that Powell will 'douse cold water' on them, resulting in a more intense tug-of-war between bulls and bears.
Essentially, this is the Federal Reserve's dilemma between 'anti-inflation' and 'economic stability', colliding with the market's desire for 'stability' and the policy's need to 'leave room for maneuver'.
