Why does Powell refuse to cut interest rates? The truth is wilder than you think.

Trump recently started criticizing Powell again, even saying he is “dim-witted.” But Powell just pretends not to hear and keeps saying “wait a bit longer.”

On the surface, he says things like “inflation still has uncertainty”, but actually 99% of people are guessing wrong - the real reason is that he wants to preserve his “historical status”.

Powell's term has entered its final year, a golden moment that defines his historical evaluation. In the previous round, he referred to inflation as a “transitory phenomenon,” which backfired directly, and the reputation of the entire Federal Reserve plummeted as well. Now Trump is applying pressure, and he is even more passive—he can neither be swayed by Trump (that would reduce him to a political tool) nor dare to significantly cut interest rates (for fear of repeating the last mistake).

So his tactic is just two words: drag.

One dragging (using ambiguous wording to buy time), two pretending (acting as if completely unaffected by politics, seriously stating “the data needs validation”), three cooling (responding coldly to criticism of Trump).

In the short term, the probability of a significant rate cut by the Federal Reserve has decreased substantially. Trump continues to criticize, and the market continues to speculate, but Powell is “dragging, steady, and cool”—maintaining the baseline and upholding a professional persona.

There are only two possible turning points:

• The inflation data has shown significant changes.
• Trump directly changes personnel

This is no longer just a matter of monetary policy, but a game of power, reputation, and the independence of the Federal Reserve. Once you understand this layer, you can truly grasp the next steps in the global market.