The U.S. labor market and economy are still very good, and inflation has dropped well, reaching 4%. No signs of recession have been found, giving the Federal Reserve the courage to raise interest rates.
Powell expressed the possibility of consecutive interest rate hikes in July and September to curb inflation and reach the 2% inflation target. At present, the CPI has dropped well, especially due to the sudden drop in energy prices, but if liquidity is released, inflation will inevitably take off again. Moreover, core inflation is still very stubborn. The only way to bring it down completely is to raise interest rates, or to maintain high interest rates.
Prior to this, the Fed had raised interest rates 10 times in a row. But Powell and most policymakers say more tightening will eventually be needed to keep inflation under control. The latest dot plot of interest rate paths shows that Fed officials expect to raise interest rates twice more this year, by 25 basis points each time.
However, U.S. stocks performed quite well in the first half of this year. The crypto market and U.S. stocks performed at different paces but also performed well.