Keeping rates unchanged is the biggest dove 🕊️ that Powell can offer.

The reason for not raising rates is obvious. The core PCE in March was still bouncing above 4%, but the market has already priced in the expectations. A rate hike would first blow up the sky-high valuations of U.S. tech stocks. Apple and Microsoft, which account for 30% of the S&P 500, are already at historically high P/E ratios—another 25 basis points would be enough to send pension fund holdings flying.

A rate cut is even more of a dead end. With wage growth in the labor market not slowing down, the used car market rebounding, and rent stickiness remaining high, do they really think the coffin lid of 1970s stagflation can stay shut? More importantly, the Fed's credibility is at stake. After shouting 'higher for longer' last year and then turning around to cut, who would take the dot plot seriously in the future?

Right now, it's a game of chicken—who blinks first. But Powell knows full well that keeping rates steady is already a soft message to the market. Not daring to hike again is an implicit admission of weakness. Look at the inverted yield curve—it's been nearly two years. The pressure from bank credit contraction will explode sooner or later. This game of slow bleeding is all about seeing which gives out first: debt or inflation data.

By the time the rate-cut card is finally played, all the good news will already be priced in. The Fed's days of being roasted over the fire are far from over.$NASDAQ Composite Index(.IXIC.US)$SPDR S&P 500(SPY.US)$Dow Jones Industrial Average(.DJI.US)