The Federal Reserve Chairman Powell announced no rate cuts, keeping interest rates steady between 3.5% and 3.75%, but the more stimulating news is that the probability of a rate hike has increased. What does this mean? I originally thought there would be a red envelope giveaway, but not only did that not happen, it might even cause you to pay money. What's really going on? The reason for discussing a rate hike is definitely because inflation is quite serious. At the end of last year, Powell even boasted that as long as the U.S. government stopped randomly imposing tariffs, inflation could be reduced this January. But what happened? The Supreme Court did overturn Trump's tariffs, yet inflation didn't actually come down. But smart people all know that the main driver of rising inflation now isn't tariffs, but the energy crisis. Is Powell really influenced by conflicts? However, what worries him most is high oil prices. Oil prices push prices upward on one hand, and on the other hand, they drag down the economy. Add the energy crisis and risks to the U.S. stock market, and that spells a crisis. Whether the Fed will raise rates or not depends on this situation; it simply doesn't have the room to do so. In fact, those with voting rights within the Fed, including Powell himself, secretly hope to cut rates, but conditions don't permit it. Moreover, economic data and financial markets both look like there's no room for a rate hike. The core members of the Fed, including Powell, genuinely want to lower rates, but the current objective conditions don't meet the requirements, so they dare not implement a rate cut. Considering the three core realities, a rate hike is simply impossible. First, there are hidden concerns in the employment sector; the employment foundation can't support a rate hike. The latest official data shows that in March 2026, non-farm employment increased by 178k jobs. It seems to far exceed expectations and shows a short-term rebound, but the previous February non-farm data was significantly revised downward, originally reduced by 92k jobs, but actually revised to a decrease of 133k jobs. The deep-seated weakness in the labor market hasn't been eliminated, and the sharp decline in previous employment data still lingers. Reckless rate hikes that raise financing costs will only directly impact the real economy and amplify recession risks. Second, the U.S. financial system harbors hidden dangers; raising rates is like deliberately stepping on a landmine. The recent headlines about the private credit crisis aren't just short-term hype—they reveal an invisible risk in the financial chain, exposing the poor risk resistance of small and medium-sized U.S. institutions. Currently, liquidity in the market is already tight, and small and medium financial institutions are under immense pressure to roll over funds. If rates are raised again, tightening funding channels could trigger a chain of debt defaults, directly igniting widespread financial risks. The Fed doesn't dare to risk this inflation-structure divergence; there's no need to raise rates to control prices. Short-term geopolitical conflicts push oil prices higher, causing CPI to rise slightly by passive effect, but core inflation growth is fully controllable. Core CPI excludes energy and food, which are short-term volatile categories, and aligns more with residents' income and real offline consumption profits. Currently, U.S. wages are stagnant, and consumer willingness is low; the positive cycle of prices, wages, and consumption simply can't start. External energy price increases can't sustain persistent core inflation, and there's no risk of prices spiraling out of control. On one side, employment has hidden risks, and financial landmines are lurking, forcing the Fed to loosen monetary policy to stabilize. On the other side, weak core inflation means there's no urgent need to hike rates. As long as the Fed passively observes, a rate cut is just a matter of time. Another factor is that Powell will officially step down on May 15, and his successor is very likely to be Waller. Will he be influenced by Trump to cut rates? Although Waller promised that he would never be a puppet of the president if elected, he confidently said he would initiate a systemic reform within the Fed, including reducing the number of policy meetings and building a new framework to address inflation. But currently, Trump is caught in both internal and external dilemmas. The primary challenge is to resolve the geopolitical energy crisis. If oil prices can't be stabilized and stagflation can't be alleviated, economic and people's livelihoods will both suffer, and his mid-term election prospects will be bleak. For political reasons, future geopolitical tensions are likely to see significant easing. As for Powell's departure, whether the Fed can maintain independence remains to be seen.