【Market Has Already Written the Rate Hike Script—Will the Fed Play Along?】While the Federal Reserve maintains a rate-cutting bias at the official level, market expectations have clearly shifted, even beginning to bet on the possibility of future rate hikes. Three major factors driving this rising risk include: inflation persisting above the 2% target, potential oil price increases further pushing up prices, and real rates continuing to decline since rate cuts began in 2024, rendering monetary policy no longer distinctly restrictive.

Current inflation remains stubborn, particularly with core services inflation staying elevated, undermining the effectiveness of the Fed's strategy relying on "stable inflation expectations." If inflation proves difficult to bring down, the Fed may be forced to suppress the economy and employment to achieve its targets, meaning the rate hike option is back on the table.

Meanwhile, the dampening effect of rising oil prices on the economy is limited. Combined with fiscal stimulus and looser credit conditions, overall demand remains strong, making it difficult to ease inflationary pressure. Major global central banks are also broadly signaling a more hawkish tone, driving bond yields higher.

Given all this, why isn't rate hiking the base case scenario? One reason is that with tariffs and housing pressures subsiding, inflation is likely to resume its downward trend. Another reason is the labor market. While the labor market is not in a critical state, it is not healthy either. With annual wage growth below 4%, coupled with solid productivity growth, it is entirely compatible with a 2% inflation rate.

Finally, with the ongoing Iran conflict, the risk of persistently elevated energy prices is increasing, which could seriously damage the economy and disrupt financial markets, potentially triggering recession and ultimately leading to falling inflation. Therefore, the Fed should exercise patience before seriously considering rate hikes.

(The above views are excerpted from Wall Street Journal columnist Greg Ip's commentary, for reference only and do not constitute investment advice#TradFi首创多倍杠杆 #加密行情震荡