Bitcoin "Unfavourable Information" signal strikes! The Federal Reserve (FED) spokesperson: Powell is not ready to cut interest rates, officials are divided into 3 major camps.

In the Crypto Assets market, the direction of the monetary policy of The Federal Reserve (FED) has always been a key factor that affects the market nerves. Recently, Nick Timiraos, a reporter known as a mouthpiece for the FED from The Wall Street Journal, reported that there is a split in opinions within the FED regarding interest rate cuts, making it impossible for the FED to discuss specific measures for August this week, essentially predicting that decisions will be made based on the specific situation in September. This news is undoubtedly an "Unfavourable Information" signal for risk assets like Bitcoin. Under the tariff policy of the new president Trump and public pressure, the issue of the FED's independence has come to the forefront, adding uncertainty to the timing of the turn of this "super tanker" of the global economy.

The Federal Reserve Internal Opinion Divergence: Officials Split into Three Factions, Each Holding Different Views on Interest Rate Direction

Nick Timiraos mentioned that ahead of the Federal Reserve's decision this week, Washington and Silicon Valley are watching when this "super tanker" of the global economy will change course. The timing of interest rate cuts was originally a technical issue, but now it has been pushed to the political forefront by the new President Trump’s tariffs and public pressure. Within the Federal Reserve, there are factions of wait-and-see, immediate interest rate cut advocates, and inflation hawks, with divisions mainly revolving around the intensity of tariffs on inflation and concerns in the labor market.

The Watchful Party: The representative figure is Mary Daly, the President of the San Francisco Federal Reserve Bank. She emphasized that taking action too early might drive prices up again, but long-term high interest rates could also suppress employment. She reminded that "you can't wait forever," but advocates for observing data for another two months.

Immediate Rate Cut Faction: Led by Governors Christopher Waller and Michelle Bowman. Waller pointed out that tariffs are a one-time shock, "If we wait until September to cut rates, what are we waiting for? Do it now." He believes the headline unemployment rate masks weakness in private sector hiring and that preemptive action is necessary.

Beware of inflationists: led by Raphael Bostic, the president of the Atlanta Federal Reserve Bank. Bostic is concerned that price pressures "in the pipeline" have not dissipated, and news about tariffs prolongs price anxiety; he needs to see more obvious signs of weakness before feeling comfortable lowering interest rates.

The Independence of the Federal Reserve is Under Test: Political Noise Beyond the Data

Nick Timiraos also mentioned that Trump publicly called out Powell and even inspected the renovations of the Federal Reserve office building, bringing the issue of independence to the forefront. White House advisors criticized wasteful spending, further amplifying market concerns about decisions being politicized.

Former Dallas Federal Reserve President Robert Kaplan compared the Federal Reserve to a "super tanker": "If you make a decision a meeting or two late, that is a tactical issue and is manageable." For him, the real risk lies in a repeat of the uncontrolled inflation seen in 2021-22, rather than a temporary lag. Former policy chief William English similarly cautioned that the ultimate test lies in "communication and politics." Even if interest rate cuts have limited effects on inflation or unemployment rates in the coming months, the tone and timing can still shake the financial markets. This shows that the Federal Reserve's decisions are influenced not only by economic data but also by political pressures and market expectations.

Market bets: Will there be a rate cut in September?

The probability of interest rate cuts has become an instant betting market for traders. According to Goldman Sachs, the probability of a rate cut in September is "slightly above" fifty percent, reflecting that some investors believe the impact of tariffs is manageable and economic momentum is slowing.

However, the Federal Reserve is more concerned with two key sets of data: whether inflation trends are rebounding due to tariffs, and whether the labor market continues to loosen. If price pressures accumulate over the summer and employment remains strong, the wait-and-see faction and the inflation-wary faction will gain weight; if inflation declines moderately and employment weakens, the pro-rate-cut faction is expected to strengthen. This also means that the economic data in the coming months will be crucial for determining the timing of the Federal Reserve's interest rate cuts.

Risk Management of Super Tankers: Balancing Independence and Policy Misjudgment

The divergence among the three factions highlights the complexity of decision-making: an early interest rate cut may reignite inflation, while a late cut could suppress growth. In the face of the double-edged tariffs and ubiquitous political noise, Powell's team must strike a balance between maintaining independence and avoiding policy misjudgments.

This week's meeting results, whether maintaining interest rates or releasing hints of a rate cut, will truly test subsequent communication: how to convince the market that this "super tanker" still has the helm, rather than being swayed by short-term political winds. The global capital markets will vote on trust through prices, and the economy will validate the gains and losses of decisions through growth and employment data. Ultimately, the timing of a rate cut may only differ by a quarter, but its impact on The Federal Reserve (FED) reputation and the valuation of dollar assets could last for years. The world is now waiting for Washington's next words.

The differing opinions within the Federal Reserve regarding interest rate cuts, along with the political pressure from the Trump administration, have brought uncertainty to risk assets such as Bitcoin. In this macroeconomic context, investors should closely monitor each statement from the Federal Reserve and changes in economic data, carefully assessing market risks. After all, every turn of the helm of this "super tanker" of the Federal Reserve will have a profound impact on the global financial markets.