Recently, the Federal Reserve Chair has once again become the focus of public discussion. More interestingly, this reflects the market's true expectations regarding policy direction.

Looking at data from prediction markets, since mid-December, the market's pricing for "holding steady" next month has gradually increased and is now at 87%. These predictions, backed by real money, often reflect participants' genuine thoughts.

From a broader perspective, the most pressing issue for the US now is the risk of stagflation. Interestingly, the Fed Chair's speech almost slipped and mentioned this term, but ultimately held back — a detail that reveals internal conflict.

The problem lies here: if interest rates are cut, inflation will rebound immediately; if not, economic growth and employment become problematic. The three main threats of stagflation are well known — economic stagnation, high inflation, and weak employment. Now, it's a dilemma with no easy way out.

Additionally, the financial markets have been hitting new highs continuously. From a policy standpoint, the Fed has little reason to intervene to rescue the market. As a result, the probability of a rate cut next month is indeed low.

What if there really is no rate cut? The trading market next month should be very interesting. I think the recent rally in US stocks might also need to pause, and I’ll share more thoughts later.