What’s the first question after Powell takes office: Who yields first, inflation or interest rates?

When a new chair takes office, the first challenge they usually face isn’t applause but difficult problems. The first question in Powell’s era is whether inflation or interest rates will bow first. The market has already priced in a “tighter policy,” with the probability of another rate hike this year once approaching 70%, indicating that everyone’s expectations for the June meeting have become quite aggressive.

But reality is often more complicated than expectations. If the Federal Reserve tightens too quickly, it could suppress growth; if it acts too slowly, inflation may remain sticky and continue to delay. Therefore, the June decision is like walking a tightrope: on the left is “prevent inflation from rebounding,” on the right is “don’t tighten the economy too much.” The new chair’s most important task isn’t to immediately prove how tough they are, but to demonstrate that they can maintain balance.

From the market’s perspective, the more likely outcome in June is a “hawkish but not extreme” stance. That is: more hawkish language, a firmer attitude, but not necessarily taking all actions at once. This approach can pressure inflation while maintaining policy flexibility. For traders, this scenario is the most frustrating because it’s neither as relaxed as a dovish stance nor as decisive as aggressive rate hikes, but keeps everyone guessing. #成长值抽奖赢金条