At the hearing, Powell avoided discussing sensitive issues.

Powell's Congressional Hearing: Strong Economy But Avoids Tariffs, Musk 'Audit' Concerns

On February 12, Eastern Standard Time, Federal Reserve Chairman Powell attended the first congressional hearing since Trump's inauguration. In his speech, he acknowledged the robust performance of the U.S. economy and reiterated the Federal Reserve's patience regarding interest rate cuts. However, on sensitive issues such as tariff policies, bank account security, and Elon Musk's role in the government, Powell cautiously avoided them, stating they are not within the Federal Reserve's responsibilities.

Strong U.S. Economy, Federal Reserve in No Rush to Cut Rates

Powell stated that the U.S. economy is currently in a "very good state," with the unemployment rate steady at 4% and inflation close to the Federal Reserve's 2% target, maintaining a stable growth momentum overall. He emphasized that while the Federal Reserve is always ready to adjust policies based on economic data, there is currently no urgent signal to cut rates further. If inflation continues to fall or the job market weakens, the Federal Reserve will consider loosening policy, but for now, the policy will remain stable.

It is worth noting that the Federal Reserve cut rates by a full percentage point last year but decided to keep the benchmark rate at the 4.25%-4.50% range during the policy meeting in January. Market expectations for rate cuts have also changed, and investors currently expect the Federal Reserve to cut rates only once this year, by 25 basis points.

Hearing Focus: Tariff Policy, Musk 'Audit,' and Banking Security

Despite Powell mainly discussing economic prospects at the hearing, lawmakers were more focused on the policy changes after the new Trump administration took office and their impact on the Federal Reserve. Especially on the new tariff policy, whether Musk's team tried to access the Federal Reserve system, and bank account security, these issues became central discussion points at the hearing.

1. Uncertainty of Tariff Policy
   Since Trump took office, he has announced widespread tariffs on major trade partners such as Mexico and Canada but postponed the effective date several times. This uncertainty makes it difficult for markets and policymakers to predict its long-term impact. Lawmakers frequently asked Powell whether tariffs would raise inflation, but he cautiously responded, "Rising inflation is a possible outcome, but the extent depends on which goods are taxed and at what rate." He emphasized that the Federal Reserve will not pre-judge the impact of tariffs but will adjust policy based on actual economic data.
2. Musk 'Audit' Controversy
   Previously, reports suggested that the government efficiency department led by Tesla CEO Elon Musk might be trying to access the Federal Reserve system, attracting market attention. At the hearing, lawmakers repeatedly questioned whether the Federal Reserve was subject to external interference, but Powell remained silent on Musk's inquiries, merely stating that "the Federal Reserve's independence will not be affected."
3. Bank Account Security Issues
   In financial regulation, lawmakers expressed concerns about the security of the banking system, particularly whether the new government's policies would affect deposit insurance and bank stability. Powell stated that the U.S. banking system remains strong, with bank accounts being "generally safe," and noted that banks have ample capital and are also protected by the Federal Deposit Insurance Corporation.

Market Expectations: Only One Rate Cut Expected This Year

Powell repeatedly stated at the hearing that the Federal Reserve would continue to observe economic data before deciding whether to cut rates. He emphasized that the Federal Reserve would not adjust policy due to political pressure or market expectations but would base core decision-making on economic data. Current market expectations for rate cuts have cooled, and the latest data shows that investors have adjusted from previously predicting multiple cuts to expecting only one rate cut by 2025, at a rate of 25 basis points.

Conclusion: Complex Policy Environment, Federal Reserve Still Facing Challenges

Powell's testimony not only confirmed the strong performance of the U.S. economy but also reflected the uncertainty at the beginning of the new administration. From changes in tariff policy to Musk's team role in the government, and the stability of the banking system, these issues could potentially affect the Federal Reserve's decision-making environment. In the coming months, the market will continue to focus on inflation trends, employment data, and the Federal Reserve's next steps, while how the Federal Reserve maintains economic stability in a complex policy environment will become a global focus.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.