Market sentiment regarding the Federal Reserve's monetary policy direction has undergone significant changes recently. Previously, given US President Trump's continued pressure on former Chair Powell, the industry generally speculated that successor Wash might implement a more dovish strategy. However, with the release of the latest US economic data, this sentiment reversed rapidly. Latest forecasts from mainstream financial institutions indicate that additional rate hikes could even occur in 2026.

According to the latest report from the global research department, the federal funds rate is expected to increase by a cumulative 75 basis points by the end of this year. This adjustment plan involves three steps, scheduled during the FOMC meetings in September, October, and November. Notably, this prediction contradicts the mainstream consensus on Wall Street. Analysis suggests the basis for this adjustment lies in Wash's remarks following the recent Federal Open Market Committee meeting, as well as the continued resilience of the US economy, with employment data serving as strong evidence.

Meanwhile, the inflation rate has remained significantly above the target level for years, leading some critics to argue that the Fed may be loosening its price stability goal. Looking further ahead, some perspectives suggest the Fed will maintain unchanged interest rates in 2027.

Political dynamics are also drawing attention. If the Fed chooses to hike rates while maintaining high levels long-term, this will be viewed as a signal of the institution's independence. Trump previously severely criticized Powell for failing to lower the federal funds rate faster, arguing it was unfavorable for stimulating the market and reducing US debt financing costs. Beyond doubts on whether Wash can resist political pressure, the dispute also involves Powell himself, who faces a criminal investigation over an expensive renovation project and has been criticized by senior bankers including former Treasury Secretary Yellen. Yellen once compared Trump's call for rate cuts to banana republic-style behavior. The struggle surrounding Fed independence and political pressure continues to unfold.