In-depth Interpretation of Powell's Speech:

After reviewing Powell's speech in more detail, beyond the three points I mentioned this morning, there are some deeper aspects worth considering:

1. Powell emphasized the uniqueness of this round of tariffs. While he acknowledged their significant impact on inflation, he did not believe tariffs would necessarily create long-term pressure. This implies that only if long-term inflationary pressure materializes would the Fed consider changing its stance on rate cuts.

2. Powell clearly stated that the Fed's decisions are based on the extent of deviation from data and targets, as well as the time needed to return to normal. If inflation deviates significantly from the 2% target and proves difficult to rein in, the Fed will maintain a hawkish stance or even hike rates. If the unemployment rate deviates substantially from full employment, rate cuts would follow. However, he stressed that "price stability outweighs long-term strong employment," hinting that if inflation and employment goals conflict, the Fed would prioritize inflation control.

But whether inflation will surge remains questionable. First, tariffs don’t affect all goods across the board. Second, their impact will reshape corporate pricing and cost structures, reaching equilibrium over a certain period rather than causing sustained long-term effects. That said, market expectations for Fed rate cuts have diminished. Considering the various inflation factors, the overall market impact is limited—the real wildcard lies with the "unpredictable" Trump.

Follow Teacher Hua for daily investment opportunities~ $NASDAQ Composite Index(.IXIC.US) $SPDR S&P 500(SPY.US) $Dow Jones Industrial Average(.DJI.US)