Why the Federal Reserve is afraid to raise interest rates? Ten solid reasons explained clearly

Kevin Wash is about to chair his first policy meeting next week. Although there has been a strong voice for rate hikes before—non-farm payrolls surged, PCE high, AI boom, oil prices soaring… why? Ten hardcore reasons
1. Inflation looks high but is actually weakening
Overall CPI rose 4.2% in May, but 60% of that was driven by oil prices. Core CPI only increased 0.2% month-over-month, below expectations. The Fed mainly monitors core inflation pressures from the supply side (Middle East chaos), and rate hikes are basically useless
2. Non-farm data is a “pulse,” not overheating
In May, 172k new jobs were added, seeming explosive, but 73% came from hotels and local governments—hiring for holidays and the World Cup. Finance, retail, and other industries are still shrinking
3. Oil price increases are due to geopolitical conflicts, rate hikes would only add chaos
Brent crude fluctuates between $95-$110, mainly due to blockage of the Strait of Hormuz. The stagflation lessons of the 1970s are still fresh
4. The economic foundation is not solid
Manufacturing PMI is sluggish, GDP growth is below potential, real estate remains weak. AI is lively but only locally, far from requiring total measures (like rate hikes)
5. Ordinary people are already struggling
Oil prices + high interest rates, credit card delinquency rates soaring, non-essential consumption shrinking. Wages only increased 3.4%, which is hardly enough to bear the burden
6. The landmine of commercial real estate has not been dismantled
Office vacancy rates are high, valuations have fallen, regional banks hold a bunch of bad loans. Raise rates again, refinancing costs spike, risk of a bank crisis repeating from last year
7. Federal debt hits 39 trillion dollars, interest payments exceed 1 trillion
High interest rates have already strained fiscal finances, and further hikes could lead to a vicious cycle of “higher interest → larger deficit → passive rate increases”
8. The market is as fragile as glass
Just the expectation of a “rate hike” caused US stocks to decline, Treasury yields to soar, and global risk assets to shake violently. Actual rate hikes could cause a collapse
9. When the dollar hikes, the whole world suffers
Emerging market currencies depreciate, capital outflows increase, debt risks rise. This is a typical “hurting others without benefiting oneself,” ultimately backfiring on the US itself
10. The effects of previous rate cuts have just been released
Monetary policy has a lag of 3-12 months. The rate cut effects in 2024-2025 are only now reflected in the slowdown of core PCE and CPI month-over-month
In summary: inflation is caused by supply, employment is temporary, the economy is artificially inflated, and the market is fragile. Wash’s first appearance will most likely choose to “wait”