On February 12th, during a hearing with the House Financial Services Committee, Federal Reserve Chairman Jerome Powell presented a firm stance concerning the Federal Reserve's interest rate policyDespite pressure from the U.S. government that suggests lowering interest rates, Powell boldly asserted that the Fed remains steadfast, prioritizing real economic conditions above all elseThis declaration marks a notable stand, reiterating the independence of the Federal Reserve in its decision-making process.

During the questioning session, Powell maintained a calm yet assertive demeanor as he reassured listeners, “People can rest assured that we will continue to work diligently, making decisions based on economic conditions.” His statement encapsulates significant undertones; it is not merely a cautious assurance but a clear message to global financial markets that the formulation of monetary policy by the Fed is not swayed by external pressuresInstead, it is anchored in the fundamentals of the U.S. economyThis announcement serves as a calming reassurance to market participants, injecting clarity and stability into what can often be a volatile sector.

Over the course of this week, Powell has been busy before Congress, articulating the Fed's monetary policy testimonies in both the House and the SenateThroughout these sessions, he has underscored the present interest rate strategy of the Federal Reserve: there is no urgency to further cut rates; instead, the intention is to maintain current levelsPowell emphasized that the Fed is patiently awaiting clear signs of decreasing inflation, indicating that further rate cuts would only be contemplated when inflation shows significant movement towards the 2% targetThis perspective aligns closely with his statements following last month’s rate decisions, where he indicated that the Fed would not contemplate further cuts until inflation approaches the established target.

Examining the recent history of the Federal Reserve's interest rate adjustments, we see that in the previous months, the Fed decided to maintain the benchmark interest rate at a stable range of 4.25% to 4.5%. Notably, in the last three meetings of the previous year, there were cumulative cuts totaling 100 basis points, suggesting that the market perceives the first phase of the current rate-cut cycle may have concluded

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The Federal Reserve's current commitment to existing rates signals careful planning for the subsequent phases of economic adjustmentsThis strategy is reflective of the Fed’s thorough consideration of economic conditions, aiming to create advantageous circumstances for a stable recovery.

In the complex and fluid economic landscape today, the series of strategies implemented by the U.S. government has become a critical factor in determining the economic chess gameMany Federal Reserve officials uphold a cautious outlook, closely monitoring the effectiveness of new policies, particularly the much-discussed tariff initiativesThey recognize that the introduction of these policies would create ripples across the calm economic waters, directly impacting the prices of imported goods and subsequently altering cost structures across related industry chainsFrom production to consumption, this disruption may affect the entire economic chainSuch concerns cause unease among many economists, who worry that these tariff policies may elevate inflation levels at least in the short term.

The inflationary pressure resulting from tariff hikes could push up the prices of imported goods, leading producers to transfer increased costs to consumersConsequently, consumer prices might rise, contributing to a broader inflationary trendAn example of this apprehension can be seen in the inflation data recently released for January, where the Consumer Price Index (CPI) showed a year-over-year increase of 3%—a significant bump from the 2.4% low recorded in SeptemberFurthermore, when factoring out food and energy prices, the Core CPI climbed by 3.3% year-over-yearThese metrics starkly illustrate a rebound in inflation levels, indicating that the Fed’s 2% aspiration remains unfulfilled.

As the latest CPI data emerged, it triggered a noticeable ripple effect across financial marketsExpectations surrounding the number of rate cuts the Fed might make this year were significantly diminished

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