Market Analysis: The Fed Will Control Inflation Expectations

People stimulate changes in GDP, consumer health, corporate growth, financial conditions, and Federal Reserve policy.

Federal Reserve Chairman Powell is facing a serious policy dilemma: under immense government debt and political pressure, the Fed has had to abandon its independence and anti-inflation stance. Instead, it has resorted to measures like quantitative easing to finance the government, creating a situation of "fiscal dominance" similar to the Volcker era of the 1970s. This foreshadows the Fed's need to reinitiate loose monetary policy, which could potentially drive up the prices of assets like Bitcoin.

Citi believes geopolitical turbulence is temporary and the rate cut trajectory remains unchanged. Meanwhile, Deutsche Bank warns that the policy has reached a neutral stance, with no interest rate cuts in the foreseeable future.