Breaking News

Federal Reserve Chair Powell Under Criminal Investigation This Morning!
📈 Analysis of the Impact Path on Financial Markets

The market's greatest concern is not the personal future of a certain official, but the potential political interference in the entire monetary policy framework. The possible impact pathways are as follows:

1. Short-term and Direct Impact

· Increased Market Volatility: This highly politicized event itself will add uncertainty to the markets, potentially leading to increased volatility in stocks, forex, and bond markets.
· Policy Expectation Confusion: The public will worry whether the Fed's future decisions are based on economic data or political pressure, making it more difficult to predict the interest rate path.

2. Medium-term Structural Risks (Core Concerns)

· Erosion of Federal Reserve Independence: If the investigation leads to Powell's early departure or forces the Fed to make concessions on interest rate decisions, it will be a significant setback to its independence. Analysis firm Evercore ISI believes that the risk of "eroding the Fed's independence" through personnel appointments is greater than outright dismissal of Powell.
· Inflation Expectations and Dollar Credibility: Markets may start pricing in "excessive easing driven by politics." This could lead to:
· Rising long-term inflation expectations, causing turmoil in the bond market.
· Weakening the attractiveness of the dollar as a "non-politicized" reserve currency, with the dollar potentially facing long-term depreciation pressures.

3. Long-term Uncertainty

· Policy Framework Shift: If Trump appoints a compliant new chair after Powell's term ends in May 2026, the Fed's "reaction function" could undergo a fundamental change, becoming more inclined to support economic growth and government debt financing rather than focusing solely on inflation control.