Powell's speech at Harvard tonight, be cautious of the pitfalls! The market is calmly observing the interest rate hike: The war in the Middle East makes rate cuts seem a long way off.

Federal Reserve Chairman Jerome Powell will appear at Harvard University tonight, expected to reiterate his stance on maintaining interest rates— the inflationary pressures that prevent him from cutting rates are triggered by Trump’s own Middle East policies.
(Background: Powell admits to being the subject of a criminal justice investigation: I am being targeted because I refused Trump’s request to lower interest rates)
(Background: Trump criticizes Powell, saying “I can fire you faster than you can cut rates,” will the independence of the Federal Reserve affect the market?)

Table of Contents

Toggle

• What Powell is expected to say: Pause, wait, keep options open
• Trump’s dilemma: He ignited the fire but blames Powell for not putting it out
• Cryptocurrency market: Rate cuts are distant, risk assets under pressure

Federal Reserve Chairman Jerome Powell will appear at Harvard University tonight at 10:30 PM to participate in a discussion for an introductory economics course. The event does not have a specific theme set, but is expected to cover the current economic situation, inflation trends, and monetary policy direction.

This is one of the most closely watched events in the market this week, with another variable being the headline risks from the Middle East situation. This week also marks the transition point from March to April, with labor market indicators returning to focus, and statistics such as non-farm employment will be released in succession, adding more interpretive space to Powell’s remarks.

What Powell is expected to say: Pause, wait, keep options open

Analysts expect that Powell will not proactively touch on the sensitive area of “politicization of the Fed,” but may convey a core signal: that until the situation in the Middle East becomes clearer, the Fed is inclined to pause rate adjustments and retain policy flexibility.

This position is consistent with the tone from the FOMC press conference after March 18. At that time, Powell emphasized the dual mandate—maximum employment and price stability—and under the current uncertainty around both projects, the Fed is not in a hurry to act.

Once the conflict in the Middle East escalates, energy inflation pressures will rebound, subsequently compressing the Fed’s room for rate cuts. This is precisely the scenario the market is most worried about at the moment: not recession, but persistent inflation making the Fed immobile.

Trump’s dilemma: He ignited the fire but blames Powell for not putting it out

The irony of the situation is that part of what prevents the Fed from cutting rates is a consequence of Trump’s own policies.

As the situation in the Middle East escalates and energy prices come under pressure, inflation expectations are therefore difficult to cool down—this logical chain points to the White House’s choices in foreign and energy policy. However, Trump continues to publicly pressure Powell to cut rates, even stating, “I can fire you faster than you can cut rates.”

Analysts predict that if Powell again states a pause on rate cuts tonight, Trump is likely to retaliate after the event concludes. The tension between the two is no longer just a personal feud, but a pressure test on the constitutional line of independence for the Fed.

The background is further complicated by the fact that Powell is currently facing a criminal investigation by the Department of Justice, stemming from office renovation costs. He publicly stated that the timing of this investigation coincides closely with his refusal of Trump’s request to cut rates. The confirmation hearing for his successor Warsh is expected to take place as early as April 13, with Powell’s term expiring on May 15, indicating he will continue to serve until a successor is confirmed.

Cryptocurrency market: Rate cuts are distant, risk assets under pressure

For the cryptocurrency market, Powell’s remarks tonight will influence short-term sentiment, but the more critical factor is the structural signals.

If rate cut expectations continue to be delayed, dollar liquidity will remain tight, which will lower the valuation ceiling for risk assets such as Bitcoin. Previously, three Fed officials have warned that conflict in Iran pushes rate cuts further away, a sentiment already anticipated by the market.

This week’s labor market indicators are also a key focus. If employment numbers are strong, the narrative of persistent inflation will be further solidified, making it harder to shake the Fed’s stance of not being in a hurry to cut rates. Conversely, if employment weakens, the hidden concerns of “stagflation” will truly surface, at which point market reactions may become more complex.

In the short term, if Powell maintains cautious language tonight and does not release dovish signals, the rebound momentum in the cryptocurrency market will continue to be pressured. Investors are holding their breath not only for this Harvard discussion but also for the resolution behind the complex entanglements of geopolitics, inflation, and politics—and that currently has no answer.