--- title: "The hawks collectively took a step forward tonight—how long can Powell keep walking the tightrope?" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39738798.md" description: "On 3/31, I wrote a baseline assumption — the Fed's rates would stay put this year. Tonight, this judgment was challenged by the Fed's own people. Cleveland Fed President Hammack uttered the words "rate hike" for the first time tonight. Brent crude oil at $111.09, hitting a nearly four-year high. If you hold any overvalued tech stocks, AI concept stocks, or assets reliant on low interest rates, you need to watch two CPI data points over the next six weeks. The next three minutes will explain why. First, let's talk about what happened at the Fed tonight..." datetime: "2026-04-07T07:30:12.000Z" locales: - [en](https://longbridge.com/en/topics/39738798.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39738798.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39738798.md) author: "[Fiona第一线](https://longbridge.com/en/profiles/25149506.md)" --- # The hawks collectively took a step forward tonight—how long can Powell keep walking the tightrope? **I wrote a baseline assumption on March 31st — that the Fed's rates would stay put this year. Tonight, that judgment is being challenged by the Fed's own people.** Cleveland Fed President Hammack uttered the words "rate hike" for the first time tonight. Brent crude oil at $111.09, hitting a near four-year high. If you hold any overvalued tech stocks, AI concept stocks, or assets reliant on low interest rates, you need to watch two CPI data points over the next six weeks. The next three minutes explain why. **What happened at the Fed tonight** First, some background. Hammack is the President of the Federal Reserve Bank of Cleveland\* (one of the Fed's 12 regional banks), known within the Fed as a "hawk" (an official inclined to suppress inflation through rate hikes or maintaining high rates). Her mantra over the past six months has been "current rates are barely restrictive" and "no need to cut" — both language opposing rate cuts. But tonight, in an interview with AP, she said something she hadn't said before: "**I can foresee a scenario where, if inflation persists above our target, we may need to raise rates.**" She's not backtracking. Her baseline stance is still "rates on hold for quite some time." But she has placed the word "hike" into her list of options for the first time. More crucially, it wasn't just her tonight. On the same day, two other Fed officials publicly warned that inflation "could even get worse." On the same day, the IMF chief warned that the Middle East war is dragging down the global economy and pushing up inflation. Three voices appearing on the same day — this is a coordinated pressure move from within the FOMC. **But Powell is on the other side** On March 30th, Fed Chair Powell said a key line in a lecture at Harvard University — "Energy shocks come and go quickly; by the time tightening policy really takes effect, the oil price shock is long gone." The effect of this statement was immediate: the market's probability of a rate hike in 2026 dropped from over 50% to 2.2%, and the 10-year Treasury yield fell by 10 basis points. Powell told the market in one sentence: don't worry about oil prices, this is temporary. Based on this statement, I made a call on March 31st: rates stay put this year, neither hike nor cut. **Starting tonight, that call needs to be re-examined.** **Powell's pivot is being directly tested by two numbers** Powell's entire logic is built on one premise: the oil price shock is temporary. But tonight, two numbers are directly questioning that premise. First number: Brent crude oil at **$111.09**, a near four-year high. This is the sixth week of the Iran war. When Powell said "temporary" on March 30th, his implied picture was oil prices returning within weeks. But six weeks have passed, and oil prices not only haven't returned, they're hitting new highs. Hammack emphasized tonight: "This war has lasted longer than we anticipated at the March 17-18 FOMC meeting." — She's telling the market her patience with the "temporary" assumption is being worn down by time. Second number: The Cleveland Fed's own model forecasts **April CPI could reach 3.5% — the highest since 2024**. Note the source of this number — this isn't market speculation, it's Hammack's own unit's nowcast (real-time forecast, predicting current unreleased data based on available data)\* model. She's using her own unit's forecast to pressure her own chair. **The real question: How long can Powell walk the tightrope?** The real question now isn't "will the Fed hike rates?" — not in the short term. The real question is: How many CPI reports can Powell withstand before his "temporary" narrative is shaken? There are two key dates in the next six weeks. First hurdle: The March CPI on April 10th (Friday). This CPI report will only partially reflect the oil price shock, as the Iran war started in late February, and the oil price rise from $60 to $100 mainly occurred in mid-to-late March. So the March CPI only captures the beginning of the shock. Expected inflation is likely between 3.0%-3.2%. If it's truly in this range, Powell's "temporary" narrative can still hold, and market sentiment can stabilize short-term. Second hurdle: The April CPI in mid-May. This one will fully reflect the oil price shock. The Cleveland Fed's own nowcast already puts it at 3.5%. If the April CPI is truly above 3.4%, Hammack's words tonight are no longer a "scenario," but a policy option for the May FOMC. Powell will then have to make a real choice between "continuing to insist it's temporary" and "acknowledging a structural problem." **My judgment: The first hurdle can likely be passed. But the uncertainty of the second hurdle has risen significantly starting tonight.** What it means for you If you hold overvalued tech stocks, AI concept stocks, or any assets reliant on the assumption that "low rates will persist" — **the next six weeks are not a window for adding positions, but a window for observation.** **The first hurdle is this Friday.** If the March CPI is below 3.2%, you can consider the first line of defense still intact, and continue holding existing positions. If the March CPI unexpectedly surges above 3.4%, then Hammack's words tonight take effect early, and overvalued assets need to be partially reduced ahead of time. The second hurdle is in mid-May. Before the second hurdle, I personally will not actively add to any low-rate-dependent assets. **Not because I'm bearish on AI — AI's profit realization is still accelerating. It's because "the market pretending not to hear the Fed's hawkish voices" won't last very long.** Friday's CPI is the first hurdle. Mid-May's CPI is the second hurdle. I'll only believe Powell's "temporary" narrative if it survives the second hurdle. Before that, I won't place heavy bets. $S&P 500(.SPX.US) $NASDAQ-100(.NDX.US) $VanEck Semiconductor ETF(SMH.US) ### Related Stocks - [.NDX.US](https://longbridge.com/en/quote/.NDX.US.md) - [SMH.US](https://longbridge.com/en/quote/SMH.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md)