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The Federal Reserve signals frequent policy shifts! Has inflation truly cooled down? Market risks behind officials' hints and Washington's game

The Fed has been in the spotlight these days. Officials have been speaking in turn, repeatedly refreshing market expectations for policy directions in the second half of the year.

Richmond Fed President Barkin was the first to comment, stating that inflation is still somewhat elevated but at least there are no signs of acceleration. Following that, Atlanta Fed President Bostic sent a stronger signal: inflation risks are diminishing, and he expects to see the 2% target reattain in the second half of this year. More notably, he believes current interest rates are close to the neutral zone, implying that the rate hike cycle is nearly over. Policy is now stuck in a "pause" position—neither increasing nor decreasing. His assessment of the latest inflation data is "encouraging," with the underlying logic being that the probability of a soft landing for the economy is rising.

That sounds promising. The market was about to breathe a sigh of relief, but then—

A turning point arrived.

House Speaker Johnson suddenly intervened, explicitly calling out the Department of Justice to continue investigating Powell, using phrases like "the innocent have nothing to fear." This is a typical Washington political tactic—aiming to serve two purposes: exert pressure on public opinion and subtly hint that the Fed’s independence might be under threat. How deep is the power struggle behind this? No one can say for sure. But the appearance of such interference alone is enough to tighten market nerves. How long can the Fed’s decision-making independence last? That has become the new suspense.

From the market perspective, the current situation is as follows:

Positive signals: The inflation cooling trend appears stable, and the Fed’s policy may enter a "wait-and-see" phase, with little urgency for rate cuts in the short term.

Risk factors: Political interference is increasing, and whether the Fed can maintain its independence has become a new variable. Coupled with the recurring nature of inflation data, any unexpected upward move could disrupt market expectations.

Three major questions stand before us:

Can Powell withstand this round of pressure?

Will Bostic’s "2% in the second half" promise be fulfilled? Or is it just wishful thinking based on current data?

If Washington continues to pressure the Fed, will market confidence in policy waver?

In essence, this grand Fed policy drama determines the direction of interest rates, asset allocation, and liquidity expectations in the cryptocurrency market. Is inflation really cooling down, or will it rebound after data revisions? How strong is Powell’s influence still? The answers to these questions will directly impact the market rhythm in the second half of this year.