The long-anticipated rate cut wave has not arrived yet, and it has been pushed back by a wave of hawkish remarks.

Currently, the market is facing a triple threat of strong employment, high inflation, and unexpectedly retail data. Federal Reserve officials have been speaking in turn, essentially sending the same signal: there is no need to rush to cut rates now. Vice Chair Jefferson explicitly stated that interest rates are already close to "neutral" levels, policy stance is appropriate, the economy is maintaining moderate growth, and inflation is heading toward 2%, so there is no short-term reason to cut rates.

However, Governor Bowman took a different stance. He emphasized that policy should be forward-looking and that they are prepared to act if employment data worsens. This "moderately restrictive" view diverges somewhat from the mainstream, becoming a focal point of market discussion.

What’s more upsetting is that political developments are also causing disruptions. Trump hinted at possibly replacing Powell, while Haskett might remain in his position. Once this signal emerged, the two-year U.S. Treasury yield soared, the dollar surged, and precious metals fell accordingly. Fed Chair Powell even unusually spoke out, revealing that the Department of Justice’s criminal investigation subpoena is political coercion, and this was supported by central banks worldwide.

The market’s immediate reaction was most direct. Interest rate futures show that the rate cut expectations for 2026 have been revised from three cuts to two, and the first cut has been pushed from March to June. Although this is somewhat more optimistic than the Fed’s dot plot prediction of "only one," it already reflects a significant shift in market sentiment.

The Federal Reserve is now walking a tightrope — on one side, it must combat inflation risks and maintain a hawkish stance; on the other, it faces increasing political pressure, which threatens its decision-making independence.