This morning, Federal Reserve Chair Jerome Powell is under criminal investigation!

📈 Analysis of the Impact Path on Financial Markets
The market's biggest concern is not the personal future of a certain official, but the potential political interference in the entire monetary policy framework. The possible impact pathways are as follows:
1. Short-term and Direct Impact
· Increased Market Volatility: This highly politicized event itself will increase market uncertainty, potentially leading to higher volatility in stocks, forex, and bond markets.
· Policy Expectation Confusion: The outside world will worry whether the Fed's future decisions are based on economic data or political pressure, making it more difficult for the market to predict interest rate paths.
2. Medium-term Structural Risks (Core Concerns)
· Erosion of Federal Reserve Independence: If the investigation leads to Powell's early departure or forces the Fed to make concessions on interest rate decisions, it will be a significant blow to its independence. Analytical firm Evercore ISI believes that the risk of "eroding the Fed's independence" through personnel appointments is greater than outright dismissal of Powell.
· Inflation Expectations and Dollar Credibility: The market may start pricing in "excessive easing driven by politics." This could lead to:
· Rising long-term inflation expectations, causing turmoil in the bond market.
· Weakening the attractiveness of the dollar as a "non-politicized" reserve currency, with the dollar potentially facing long-term depreciation pressures.
3. Long-term Uncertainty
· Policy Framework Shift: If Trump appoints a compliant new chair after Powell's term ends in May 2026, the Fed's "reaction function" could undergo a fundamental change, becoming more inclined to support economic growth and government debt financing rather than focusing on controlling inflation.