The director of the U.S. National Economic Council (NEC), Kevin Hassett, has recently launched harsh criticism of the Federal Reserve’s decision-making leadership for its hawkish stance. Multiple Fed officials—including Barr, Collins, and Musalem—have recently frequently signaled tighter policy. The latest economic projections also indicate that as many as 16 officials expect at least one more rate hike within the year. In response, Hassett directly questioned why further rate hikes are still necessary when core inflation is already close to 2%. He specifically called out Powell, Barr, and others, accusing the current operations of the Fed of being highly politicized, and urged that the central bank’s independence be restored as soon as possible.
This public standoff between senior White House economic advisers and central bank officials highlights deep rifts in the U.S. macroeconomic policy path. The market had widely assumed that the rate-hiking cycle was nearing its end, but most Fed officials are far more cautious about a rebound in inflation than outsiders expected—and they have even prepared for additional tightening of liquidity. Direct political pressure at the top collides with the Fed’s strong hawkish tone from within. This not only shatters the market’s single-minded fantasy of a loosening cycle, but also sharply raises the tail risk of a hard economic landing caused by policy misjudgment.
From the perspective of macro financial markets, expectations that up to 16 officials will support another rate hike this year will directly weigh on asset pricing. Treasury yields are likely to rise rather than fall supported by tightening expectations, and the U.S. dollar index is expected to maintain high and resilient strength. This will exert direct discounting pressure on valuation models for major global assets. As long as the Fed has not officially closed the window for further rate hikes, the reality of tighter liquidity and persistently high borrowing costs will continue to have a significant suppressing effect on risk assets such as U.S. stocks and commodities.
For the cryptocurrency market, $BTC and various other risk assets face severe tests of insufficient liquidity supply. Under the shadow of high interest rates—even potential additional rate hikes—global safe-haven capital is more inclined to remain in high-yield, risk-free assets, and the appetite for incremental off-balance-sheet market inflows will be severely restrained. If the Fed ultimately chooses to validate hawkish expectations and raise rates again, extending the tightening cycle is likely to trigger another round of valuation compression and leverage unwinds. In the near term, investors will need to stay highly alert to liquidity risks at the macro level. #FederalReserve #InterestRates #MacroEconomics
This public standoff between senior White House economic advisers and central bank officials highlights deep rifts in the U.S. macroeconomic policy path. The market had widely assumed that the rate-hiking cycle was nearing its end, but most Fed officials are far more cautious about a rebound in inflation than outsiders expected—and they have even prepared for additional tightening of liquidity. Direct political pressure at the top collides with the Fed’s strong hawkish tone from within. This not only shatters the market’s single-minded fantasy of a loosening cycle, but also sharply raises the tail risk of a hard economic landing caused by policy misjudgment.
From the perspective of macro financial markets, expectations that up to 16 officials will support another rate hike this year will directly weigh on asset pricing. Treasury yields are likely to rise rather than fall supported by tightening expectations, and the U.S. dollar index is expected to maintain high and resilient strength. This will exert direct discounting pressure on valuation models for major global assets. As long as the Fed has not officially closed the window for further rate hikes, the reality of tighter liquidity and persistently high borrowing costs will continue to have a significant suppressing effect on risk assets such as U.S. stocks and commodities.
For the cryptocurrency market, $BTC and various other risk assets face severe tests of insufficient liquidity supply. Under the shadow of high interest rates—even potential additional rate hikes—global safe-haven capital is more inclined to remain in high-yield, risk-free assets, and the appetite for incremental off-balance-sheet market inflows will be severely restrained. If the Fed ultimately chooses to validate hawkish expectations and raise rates again, extending the tightening cycle is likely to trigger another round of valuation compression and leverage unwinds. In the near term, investors will need to stay highly alert to liquidity risks at the macro level. #FederalReserve #InterestRates #MacroEconomics