The Powell Inquiry And The Real Market Risk

Politics… Not Inflation

Fed Pressure and Market Stability

Markets are volatile again, even after printing recent all-time highs, as political pressure around Federal Reserve policy resurfaces. Donald Trump’s criticism of the Fed centers on the idea that rate hikes suppress rallies and that strong growth should justify lower rates, not tighter policy.

The risk is not the rhetoric itself, but the possibility that markets begin to treat these comments as actionable signals, undermining confidence in Fed independence.

Inflation Steps Aside

The latest CPI print at 2.7% came in exactly as expected, reinforcing the view that inflation is no longer the dominant driver of market direction. Instead, attention has shifted toward tariffs, fiscal policy, and broader political uncertainty.

With ongoing stimulus and still-accommodative monetary conditions, inflation appears more likely to stay range-bound rather than collapse or reaccelerate in a way that forces aggressive policy changes.

Credit Card APR Proposal Is the Headline Risk

The most market-relevant development is the proposed one-year 10% cap on credit card APRs, which immediately pressured banks and financial stocks. Concerns center on margin compression, reduced willingness to lend, and unintended consequences for credit access, especially for higher-risk borrowers.

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