The Federal Reserve policy turning point is emerging, and the hawkish camp is actually expanding

Recently, the confrontation between U.S. politics and monetary policy has escalated. The investigation into the Federal Reserve Chair by the judiciary was initially interpreted by the market as a signal of easing monetary policy, but the actual outcome is quite the opposite—more and more investors and market analysts predict that this event will instead strengthen the Fed's hawkish stance.

Data speaks volumes. According to Polymarket's prediction market data, the probability of the Fed Chair's resignation by mid-year has sharply decreased from 74% to 45%, and the likelihood of resignation before the end of the year has also dropped from 85% to 62%. This indicates that the market is adjusting its expectations for leadership change at the Fed. Meanwhile, the call for hawkish candidates is rising, while the chances of candidates previously seen as political allies taking over have significantly declined.

Why is this happening? The underlying logic is worth pondering. The core dilemma faced by the Fed is: if it eases policy easily due to external political pressure, the risk of a resurgence in inflation will directly undermine the Fed's institutional credibility. Analysts point out that the cost of maintaining independence is far lower than the price of losing market confidence. This drives the Fed management to more likely stick to hawkish positions to demonstrate the scientific basis of their decisions rather than political considerations.

History often intersects politics and economics. This confrontation has broken a certain implicit balance, resulting in the Fed actually reinforcing its confrontational policy stance. For traders concerned with assets like $BTC, $ETH, $XRP, this means that the liquidity environment may continue to be under pressure in the short term, and the uncertainty in long-term inflation expectations management also increases.