Federal Reserve Chairman Powell made it clear on Wednesday (April 16) at the Chicago Economic Club that he will wait for more economic data to be released before deciding on the direction of interest rate adjustments. He emphasized that the recent market volatility is a reasonable response to the Trump administration's tariff policies, and bluntly denied the possibility of a "Fed floor". This hawkish statement directly led to an expansion of the decline in the US stock market.

Policy dilemma under dual pressure

Powell pointed out that the Federal Reserve is currently facing rare challenges: on the one hand, tariffs may push up inflation, and on the other hand, economic growth and employment may weaken. He admitted, 'This year is likely to deviate from the 2% inflation target and full employment.'. What is even more alarming is that Trump's tariff policy is seen as a "fundamental change," and its impact even exceeds the Federal Reserve's most severe estimates, making historical experience difficult to reference.

The truth behind market turbulence

In response to recent financial fluctuations, Powell believes that the market is still operating normally: "The bond and stock markets are effectively digesting uncertainty. However, Jim Carroll, a private wealth advisor at Ballet Rock, pointed out that Powell broke market neutral expectations and "when asked about the possibility of a bailout, his' not 'was shockingly straightforward. The data shows that the decline in the US stock market further widened after the speech.

Three major hidden dangers of surging economic undercurrents

Slowing growth: GDP growth rate in the first quarter has fallen, consumer spending has been weak, and import data has been distorted before tariffs

Confidence crisis: Business and household confidence index plummets, trade policy becomes the biggest uncertain factor

Legal risk: The Federal Reserve is closely monitoring the Supreme Court's precedent regarding Trump's dismissal of independent officials, but Powell emphasizes that "the independence of the Federal Reserve is protected by law

Summary: Difficult Decisions at Crossroads

At present, the federal funds rate remains in the range of 4.25% -4.5%, but the process of achieving the 2% target for inflation has stalled. Powell warned that tariffs could lead to a "short-term surge or even long-term solidification of inflation," and although the labor market is in a state of full employment, it may face a tricky situation of both inflation and unemployment rising in the future. As Powell said, 'We will evaluate the degree of deviation from each goal,' and the difficulty of this policy balancing technique is exponentially increasing.