At this week's Fed meeting, why does Powell always speak "in the fog"?

To put it bluntly, the essence of this meeting is a contest between "policy balancing" and "poor market expectations". There are two key games behind it, which have to be taken apart.

Let's talk about Powell's abacus first. Now what he cares about most is not "whether to cut interest rates", but "how to control the imagination of the market". You think, if he directly states that "we will cut interest rates" now, the market will certainly be happy - but the question is, will this make everyone have unrealistic illusions about the follow-up easing? Especially now that the Fed's internal views on inflation stickiness and economic resilience have not yet been unified, giving a clear signal too early will tie itself to death. So Powell prefers to play "fuzzy tactics": neither to say it to death nor to give a specific timetable. This is actually a "strategic ambiguity" to maintain policy flexibility and avoid market expectations from getting out of control.

Let's look at the market side. What do traders want most? A clear policy path. But what is interesting is that the current market has already experienced a phenomenon of "double anchors": on the one hand, Powell, as the current chairman, can trigger an immediate reaction from short-term funds, with extremely high weight; On the other hand, the core officials known as "shadow chairs" - such as Brad and Williams - have previously released loose signals, which has become an important reference for long-term market expectations.

Then the question arises. If Powell continues to play Tai Chi at this meeting and does not give clear guidance on interest rate cuts, how will the market react? There is a high probability that short-term volatility will intensify. Because the funds are now very entangled: they want to follow the loose expected layout of the "shadow chairman", but they do not dare to ignore the policy determination of the current chairman. This contradiction will directly amplify the intensity of the long-short game.

In the final analysis, the root cause of all this is the old problem of the Federal Reserve: fighting inflation and stabilizing the economy, which one is protected first? The market, on the other hand, desperately wants certainty, but policymakers need to be flexible. This conflict is irreconcilable, which is why there is this delicate situation of "you say yours, I guess mine".

For the crypto market, this uncertainty is both a risk and an opportunity. In the short term, every subtle change in policy statements can cause sharp fluctuations; In the long run, the real turning point will have to wait for the Fed to reach a consensus within the Fed, then the market will have a really clear direction.