Latest Speech by Powell: Major Signals for the American Economy and Financial Markets

Fed Chairman Jerome Powell has just made important statements, revealing the economic picture of America with many challenges ahead. Here are the notable points:

1. Labor Market: Stable on the Outside but Fragile on the Inside Employment figures still indicate stability, but Powell emphasizes: the decline in immigration is disrupting the labor market. As consumer demand decreases, the unemployment rate could spike faster than expected, putting significant pressure on the economy.
2. Inflation: Pressure From Tariffs and the Risk of "Inflation Round 2" The new tariffs are pushing prices up, but overall inflation is still close to the target. However, Powell warns that the biggest risk is a policy mistake: if the Fed loosens too early, inflation could come back strongly.
3. Monetary Policy: Major Changes in Direction In 2020, the Fed adopted an average inflation targeting (AIT) – in line with the low inflation, low interest rate environment. By 2025, the context had changed: high inflation, high interest rates → AIT was officially “terminated”, and the Fed returned to a flexible inflation targeting. This is an acknowledgment that the “old rules” are no longer applicable.
4. The Hidden Message in the Speech The increase in interest rates has ended – the Fed will not raise further, but a rate cut will only occur if economic data deteriorates significantly. Tariffs are just a temporary shock, not enough for the Fed to tighten immediately. The decline in labor supply means lower potential growth, and the long-term neutral interest rate (r) is higher*.
5. Impact on the Financial Market Treasuries (: Yields are unlikely to rise much more, but don't dream of super low interest rates like in the 2010s. Securities: Slowing consumption, rising tariffs → pressure on corporate profits. USD & Bitcoin: The USD remains strong in the short term, but if the labor market weakens, expectations for rate cuts will return, and Bitcoin will benefit greatly from liquidity pivots. 🔥 Conclusion The Fed is at a crucial crossroads: tightening too much = labor collapse, loosening too fast = inflation explosion. In the short term, the USD remains strong, but when the "door" to policy opens, Bitcoin could become the biggest beneficiary.