Bitunix Analyst: Market Focus Shifts from 'No Rate Cut' to Fed's Internal Consensus Losing Direction

On April 30, the Federal Reserve’s decision to maintain interest rates for the third consecutive time was not surprising. However, what truly prompted the market to start repricing was the rare 8 to 4 split during this FOMC meeting. One member advocated for an immediate rate cut, while three opposed any continuation of accommodative tendencies, marking the highest number of dissenting votes since 1992. This indicates that the Fed’s biggest issue is no longer ‘when to cut rates,’ but rather the emerging divisions within its understanding of the nature of inflation. In recent years, the Fed has consistently viewed energy and supply chain shocks as short-term events, leading the market to believe that inflation would eventually return to 2% over time. However, with the Middle East conflict becoming protracted, oil prices remaining high, and core inflation facing upward pressure again, an increasing number of officials are beginning to question whether repeated supply shocks mean that inflation is no longer a ‘one-time event.’ This is why, although the statement still retains accommodative language, three officials have directly opposed it. The real concern for the market is whether the Fed will be forced to accept ‘higher rates for a longer time’ or even revisit discussions on rate hikes in the future. More importantly, following Powell’s official announcement of stepping down as chair while remaining a board member, it signifies an open conflict with the Trump administration. This is not just a personnel issue, but a direct confrontation regarding the Fed’s independence and future policy direction. Especially with Kevin Warsh set to take over, the market is now trading on another matter—whether the next Fed will gradually abandon the ‘gentle central bank model’ that has relied on forward guidance and market communication for over a decade. For the market, the most critical signal from this meeting is not that interest rates remained unchanged, but that the Fed has begun to acknowledge: energy prices and geopolitical factors may be making the return to 2% inflation more challenging than previously thought. This is also why, following the meeting, U.S. Treasury yields remained elevated, and the pricing for rate cuts did not expand significantly, while tech stocks maintained short-term strength and Bitcoin remained volatile, yet could not escape the high volatility structure. The market is starting to realize that the biggest risk in the future may not be an economic recession, but rather the pricing logic of ‘inflation not coming down while growth begins to slow.’