The final meeting of Powell’s term still delivered a significant shock to the market.

First, there were as many as 4 dissenting votes (vote result 8 to 4), setting the record for the most since 1992, and the reasons for opposing were even more unexpected:

· Cleveland Fed President Loretta Mester, Minneapolis Fed President Kashkari, Dallas Fed President Logan: support rate cuts but oppose adding an “accommodative stance” to the statement.
· Federal Reserve Board Member Milan: oppose holding rates steady and advocate for rate cuts.

Their target was not Powell himself, but to send signals to the incoming chair, Waller—telling us that we may raise objections at any time, so be mentally prepared. A fracture in the Fed’s internal order is more dangerous than a single rate hike. In the past few years, no matter how much the market criticized, at least one thing was clear: the Fed could still maintain a “facade of unity.”

Second, the statement did not include any explicit mention of an “accommodative stance,” which was precisely what the three voters who dissented were dissatisfied with. This statement was carefully crafted, especially the wording on inflation: changing from “somewhat elevated” to simply “elevated,” showing that concerns about the potential impact on prices and oil are clearly intensifying. The expression that inflation is elevated carries an unmistakably hawkish stamp. It may look like it’s just removing one word, but within a central bank’s language system, one word is enough to represent the overall direction—tolerance for inflation has declined. Although the Fed has not directly pivoted to a hawkish stance, it has become more hawkish than before. The latest policy statement retained the nine words implying that the next policy move is more likely to be a rate cut rather than a rate hike—the three people above objected to exactly the addition of that sentence. Whether to keep this sentence will be a major highlight in the next Fed statement.

Third, Powell did not choose to “leave quietly.” At a Washington press conference, he explicitly stated that he has decided to continue serving as a governor for some time after stepping down as chair on May 15, with the specific length of time not yet determined. This move makes the composition of the Federal Open Market Committee more hawkish (the new chair may not be able to fully control the Fed). If the committee is already highly divided internally and the former chair remains in it, the future FOMC could evolve into a “perpetual infighting” committee. Every day, the market has to guess who currently has the upper hand inside the Fed.

Fourth, expectations for rate cuts have undergone a dramatic adjustment. Traders have largely ruled out the possibility of any rate cuts this year and now estimate the probability of rate hikes before April 2027 at about 40%, far higher than the roughly 20% before the announcement. A 40% probability usually means: as long as the data worsen a little more (for example, if oil prices rise a bit more), this probability will climb to 80%, even 90%. From today on, an era has ended. $BTC $ETH $DOGE #比特币现货交易量新低 #Strategy吸筹速度超挖矿两倍 #跟单金牌星探