On April 29, 2026, the Federal Reserve did not change interest rates but ignited a powder keg in its own conference room. The FOMC announced the results of the April meeting that evening, which looked unremarkable: the target range for the federal funds rate remained unchanged at 3.50%–3.75%. But what truly rewrote history was that line in small print—8 votes in favor of maintaining the status quo, 4 votes against, marking the highest dissent since 1992. A “stay put” stance regarding interest rates was reflected on the voting board as a rare divide: whether inflation is sticky, whether the economy can withstand it, and whether interest rates should be lowered soon, committee members each took their stance, and internal rifts were openly exposed to the market for the first time.

In the same week, the Federal Reserve's "people" also reached a sensitive point. Around April 24, the U.S. Department of Justice announced the conclusion of its investigation into Powell, stating that unless there was a criminal referral, it would not be reopened. During the investigation, Powell repeatedly emphasized that he would not leave the Federal Reserve Board until the investigation was thoroughly concluded to avoid casting further shadows on the Fed's independence at such a sensitive time. Now that the investigation has been settled, his role is far from a simple exit: the current chairman's term will expire on May 15, but he plans to remain on the board in a lower-profile capacity until a suitable moment to step down in the future.

The uncertainty regarding policy and personnel compounded at the same moment, directly tearing apart the market’s already fragile narrative around interest rate cuts. Nominally, the Federal Reserve chose to wait longer at the persistently high interest rate levels, but the reality was that unprecedented internal disagreements made future paths more difficult to price than at any previous “rate hike or cut.” Once the decision was made, the three major U.S. stock indices fell briefly, spot gold slipped slightly, and the dollar index surged quickly, with traders immediately interpreting it—this was not a neutral “stay put” decision but rather a hawkish “disagreement.”

A deeper disturbance came from the question of “who will call the shots next.” The market was eyeing the next Federal Reserve chair candidate and the potential influence the Trump administration might exert in the appointments while attempting to deduce a new rate path from this 8–4 voting split. Historical experience has long proven that every reassessment of global dollar liquidity and interest rate expectations spills over to all risk assets—from U.S. stocks and gold, to the price structures of cryptocurrencies most sensitive to the dollar. The rare policy disagreement paired with the impending power transition turned what was originally a straightforward bet around “when to cut interest rates” and “how many times” into a re-game about the stability of the rules themselves.

8–4 Split in FOMC: The Battle of Inflation vs. Rate Cuts

The cold, hard numbers of 8–4 placed the cracks in the conference room under the spotlight. On the surface, the target range for the federal funds rate remained at 3.50%–3.75%, with the decision framed as holding steady; but the highest number of dissent votes since 1992, at 4, indicated that what could no longer be contained was the committee members’ divergence on the future path—just how sticky inflation is, how much longer the economy can withstand it, and whether a rate cut is urgent.

In recent years, the FOMC’s formal decisions can often be summarized in a single phrase: “The committee unanimously believes...”. This time, however, four members split the “consensus” in half with their dissenting votes. The majority insisted on locking the rates at the high level, awaiting more data to provide direction, and expressed concerns about inflation's resilience and confidence in the U.S. economy's capacity to bear pressure. Since price pressures had not yet been fully subdued and growth had not clearly shown signs of stalling, there was no need to rush to ease. The minority, on the other hand, arrived at different conclusions from the same set of realities—they were clearly more concerned that high rates would drag on the future, embedding a sense of urgency for “quick rate cuts” in their dissent.

This was not a simple case of “hawks” and “doves” labeling each other, but rather an open dispute over three key assumptions: whether inflation will decline on its own or whether it has already entered a stubborn range; whether the U.S. economy's “resilience” is a healthy expansion or merely an appearance sustained by high rates; and in such a situation, whether preventive rate cuts should occur ahead of a recession or continue to suppress inflation with acceptance of potential growth costs. The emergence of four dissenting votes signaled that these three assumptions could no longer be uniformly covered within the committee.

For the market, the harm did not stem from the lack of a rate cut this time, but rather from the sudden ambiguity in the “Federal Reserve's reaction function.” After the decision was announced, the three major U.S. stock indices experienced a short-term decline, spot gold slipped slightly, and the dollar index briefly rose. Traders immediately interpreted this dispute as “hawkish”: no change in rates, a stronger dollar, risk assets recoiling. But a deeper change was that prior numerical games regarding “how many rate cuts this year” were interrupted by the 8–4 split—each future inflation data point and each employment report could trigger different thresholds among committee members, making the policy path no longer a smooth curve but rather a bunch of potentially diverging routes.

This sense of uncertainty dramatically amplified the volatility trading in both macroeconomic and cryptocurrency assets. Historical experience and mainstream research have long pointed out that cryptocurrency prices are highly sensitive to changes in global dollar liquidity and interest rate expectations. When the market no longer certifies “when the Fed as a whole will shift direction” and begins to speculate “which faction will prevail in the next vote,” volatility itself turns into a tradeable asset: macro funds hedge direction and duration on Treasury yields and the dollar, while risk-appetite capital oscillates between U.S. stocks and cryptocurrencies, responding more intensely and more short-term to the same news.

More subtly, the internal fissures within the committee intertwined with external debates on “how many times we should cut interest rates.” CICC's research report, starting from fundamental theory, still presented a framework of “about two rate cuts within this cycle,” predicated on the assumption that international oil prices do not stay above $100 a barrel for an extended period, combined with the high base effect of inflation, thus freeing up space for a rollback in prices and a shift in policy. However, the report also cautions that the actual rhythm of rate cuts would be driven by oil price performance and external variables, including political factors like Trump. Now, with the FOMC internally having publicly divided on “whether we need to cut rates quickly,” the market naturally harbors doubts about this “theoretical two-rate cuts” path: even if the model suggests that a cut is “appropriate,” the game on the policy table may make “whether it can be done” and “when it can be done” entirely different questions.

Thus, the real message this meeting left to the market was exactly the opposite of “interest rates holding steady.” The target range of 3.50%–3.75% remained unchanged, but the political and technical games surrounding this range had clearly escalated—the consensus exited the resolution text while the divisions took center stage. Macro traders and cryptocurrency investors saw a Federal Reserve that was no longer cohesive: the same U.S. data could be interpreted as a reason for “continuing high rates” or could be understood as a signal that “rates must be cut quickly.” On the surface, “nothing happened”; in reality, the internal strife that could determine the asset price frameworks for upcoming years had only just begun.

The End of the Investigation and Powell’s Quiet Continuation

Just before this internal division of 8–4 became public, an event that was nearly treated as background noise by the market quietly cleared the path for Powell.

Around April 24, the U.S. Department of Justice announced the end of the investigation into Powell and later added a crucial note over the weekend: unless there was a criminal referral, the investigation would not be reopened (according to a sole source). This essentially provided a “procedural conclusion”—the investigation was closed, and external legal uncertainties regarding his future were put on hold.

This step represented a fulfillment of prior conditions for Powell personally. He had repeatedly emphasized that he would not leave the Federal Reserve Board until the Justice Department investigation was “thoroughly concluded,” to avoid creating more noise about the Fed's independence at a sensitive moment. Now that the investigation is over, he did not immediately withdraw but instead confirmed another path: after his term as chairman expires on May 15, he will continue to stay on the board as a governor but in a much lower-profile manner, waiting for a suitable moment to leave.

On the surface, this is just a technical adjustment of his title from “Chairman” to “Governor”; in substance, it activates discussions on two levels.

One is the continuity of monetary policy.
At the moment when the FOMC faced the highest number of dissent votes since 1992, a person familiar with the framework, who has led the current rate hike cycle, choosing not to exit signifies that for a time to come, even with a new chairman, there would still be a key voting seat from the “old era” at the table. For traders betting on “rates being higher for longer” or “theoretical two cuts,” this serves as a visible anchor—Powell’s presence is seen as a certain degree of continuity in policy inertia.

The second is a re-discussion of the Federal Reserve's independence.
With the investigation just concluding, the former chairman remains on the board in a governor role, while the candidate for the new chairman still hangs in the balance, inevitably provoking external speculation: with the Trump administration set to take charge of the next round of appointments and generally thought to potentially exert influence over them, will a “former but still present” Powell serve as a buffer for independence or become a complex entanglement between old and new paths? No one can draw a definitive answer, but discussions have been forcibly initiated.

Market sentiment thus shows a typical duality:
● On one side is a bet on “policy continuity”—with the DOJ investigation concluding and Powell staying on the board, at least over the next few meetings, the decision-making logic formed in the past few years won’t be immediately overturned;
● On the other side, there is vigilance against “personnel interference”—what can truly reshape the path remains in that yet-to-be-unveiled list of chair nominations from the Trump administration, and the political stances and rate preferences behind those names could rewrite the current theoretical trajectories of two rate cuts at any moment.

Internal strife made public, personnel undecided, former chairman's quiet continuation—under these three narratives, every “stay put” decision by the FOMC turns into a vote not just on economic data but also on future personnel dynamics and the boundaries of independence.

CICC's Precondition for Betting on “Theoretical Two Rate Cuts”

Apart from personnel and political games, there’s a seemingly “calmer” path coming from the fundamental deductions given by CICC. The conclusion of the research report is not ambiguous: if looking simply at the economy and inflation itself, the Federal Reserve “still should and needs” to make about two rate cuts in this cycle—not an immediate shift, nor a long-term locking of rates at high levels, but a pullback in rates two notches when the window opens.

This “theoretical two rate cuts” logic rests on two key preconditions laid out on the table.

The first is that oil prices cannot remain consistently above $100 per barrel for an extended period. CICC's assumption is that as long as international oil prices do not stay above this threshold throughout the year, energy costs won't further exacerbate U.S. inflation, alleviating the necessity for the Federal Reserve to stay tight due to “second-round inflation” risks. In other words, if oil prices only show temporary fluctuations rather than remain high throughout the entire year, the Fed has no reason to keep rates locked in their current tight position.

The second is the “high base effect” of inflation data itself. Over the past two years, U.S. inflation has surged, elevating a significant part of prices that are already reflected in last year's corresponding data, suggesting that even if nominal prices continue to rise slightly this year, the year-on-year growth rate might appear moderate due to the high base. The meaning of CICC's research report is that if oil prices do not cause excessive disruption and, combined with this statistical buffer zone, it would not be unlikely for inflation to fall in the data, thus opening up a technical space for nominal rate reductions.

With such setup, “should and need to cut rates twice” seems more like an ideal trajectory written on paper: addressing real inflationary pressures easing while avoiding excessive strain on the economy and asset prices. But the report does not overlook the complexity of reality—it simultaneously points out that what determines whether this trajectory can be realized is not only the hard variable of oil prices but also political factors including Trump: how to select a new chairman and how the White House will express its expectations on monetary policy in the future could change both the rhythm and total number of rate cuts.

The contradiction lies in the fact that the current market pricing for the Federal Reserve's future rate cut frequency and rhythm does not align with this “theoretical two rate cuts.” Futures curves, interest rate swaps, and various asset prices have already embedded another probability distribution of “higher rates for longer or quicker shifts,” while CICC only provides a self-consistent “ideal script” under specific preconditions. Because of these differences, macro traders and cryptocurrency traders have gained actual operational space for betting—on one side there’s the internal stalemate and inertia of the FOMC's 8–4 split, while on the other is the “paper two cuts” projected from oil prices and high base effects.

For those betting on the direction of global dollar liquidity, this misalignment itself is an opportunity: whoever stands on the side of “theoretical two cuts” and believes that the market's current pricing is closer to actual future conditions will find that every fluctuation in oil prices and each piece of inflation data becomes a battleground for testing their narratives and repricing interest rate expectations.

Oil Prices and Trump: The Invisible Rope of Monetary Policy

To understand this “hold steady” decision, one should not only focus on the 3.50%–3.75% interest rate range itself but also recognize the rope that ties the FOMC in place: one end tied to international oil prices and the other end tied to the political winds in Washington.

CICC's research report includes oil prices in its key assumptions: as long as international oil prices do not remain consistently above $100 per barrel throughout the year, combined with the high base effect of inflation, inflation is expected to gradually recede, leaving some room for “theoretical two rate cuts.” Conversely, if oil prices hover at high levels or even break through this threshold, energy costs will quickly infiltrate various asset pricing and wage negotiations through expectations, pushing the already contentious issue of “inflation stickiness” further toward hawkish territory.

For an FOMC that has already split into 8–4, this is not an abstract economic theorization but a very real psychological weight during voting. Commissioners advocating for quick rate cuts need to believe that oil prices will function according to the report’s assumptions and that the inflation downturn expected from the high base will unfold step by step; whereas those worried about inflation's stickiness need only point to the external factor of oil prices to find justification for “waiting a while longer.” The result is that each fluctuation in crude oil prices subtly rearranges those undecided votes in the hawk-dove camp—the closer it gets to the psychological threshold of $100 per barrel, the harder it becomes for anyone to confidently endorse “preemptive easing.”

On the other end of this rope is the political cycle. CICC's report lists political factors including Trump as one of the key external variables affecting the rhythm of rate cuts; while the market evaluates the “theoretical two cuts” model, it also eyes the actual personnel landscape. Powell’s DOJ investigation concluded around April 24; during the investigation, he had explicitly stated that he wouldn’t leave the board until the investigation was thoroughly concluded. Now that it has ended, and with his chairman term set to expire on May 15, the framework of him staying “low-profile” as a governor is roughly clarifying, but the real uncertainty is shifting to “who will be next.”

The next chair not only concerns the redistribution of power within the Federal Reserve but is also generally viewed as a key interface for potential influence from the Trump administration. The list has yet to be formally confirmed but this uncertainty alone makes the FOMC particularly cautious during the April 2026 meeting—any action interpreted as leaning toward “easing” might be politically branded, suspected of preemptively responding to future personnel preferences rather than being based solely on current data.

The uncertainties of oil prices, the political suspense of personnel, combined with the rare internal 8–4 split, render this FOMC more like a committee caught in the cracks of a door: looking outward, it faces dual pressure from the international oil market and Washington; looking inward, it sees a route dispute already torn open around inflation stickiness, economic resilience, and the urgency of rate cuts. In such a structure, achieving a clear “easing” consensus at this moment becomes a nearly impossible task—holding steady instead becomes the “lowest common denominator” that all parties can reluctantly accept.

From Wall Street to the Crypto Circle: Trading the Divide

The 8–4 vote split has brutally torn a “hold steady” decision into the sharpest internal confrontation in thirty years. The resolution seemingly just locks rates at the high range of 3.50%–3.75%, yet behind it lies a route conflict over inflation stickiness, economic resilience, and urgency of rate cuts; coupled with Powell stepping down from chairman on May 15 while continuing to stay on the board, and the next chair candidate and political games still undecided, the interest rate path has become opaque due to the overlapping of “data dependency, personnel, and stance.”

The initial response from Wall Street has already written that uncertainty onto the trading floor: after the decision announcement, the three major U.S. stock indices fell short-term, spot gold dipped slightly, and the dollar index rose sharply. The interpretation provided by price action is straightforward—the market is correcting expectations toward a “hawkish” direction: rates may stay high longer than imagined rather than immediately embracing a clean and swift easing shift. This initial “run” in traditional assets essentially prices in the risks of a policy debate whose endpoint is not clear.

This pricing won’t stop at Wall Street. Historical experiences and mainstream studies emphasize a single point: cryptocurrency assets are highly sensitive to global dollar liquidity and interest rate expectations; and when significant uncertainties arise in policy paths, this market tends to amplify volatility. The immediate reactions in U.S. stocks, gold, and the dollar index first alter the risk appetites and positions and then transmit into the valuation of cryptocurrencies through financing costs, hedging demands, and sentiment expectations—while directions may differ, volatility often aligns.

Next, traders on both the macro and crypto sides will build their own narratives and positions around two main lines: one is “higher rates for longer.” This faction will closely monitor inflation stickiness, U.S. economic resilience, and external constraints—including political ones—to interpret the 8–4 split and the rise of the dollar index as a warning: high rates are not just a temporary noise but an extension of the new normal, with any rebound in risk assets warranting questioning and hedging.

The other is the “theoretical two cuts” path represented by CICC's research report. Under this logic, as long as international oil prices do not consistently remain above $100 per barrel throughout the year, combined with the high base effect of inflation, inflation will have room to ease, and the Federal Reserve “still should and needs” to cut rates about twice in this cycle; the real issue lies not in “whether to cut” but in how the rhythm will be distorted by oil prices and political factors—including Trump. In this narrative, traders are more likely to view every strong expression of policy rigidity as potential “long ammunition” for future shifts.

Thus, a Federal Reserve torn apart by the most dissenting votes since 1992, alongside an ongoing transition of personnel, has pushed the market into a scenario where interest rates themselves might temporarily hold steady, but the narratives surrounding them begin to diverge. Wall Street first allocates its weights through indices, gold, and the dollar, while the crypto circle amplifies volatility and deepens leverage in the shadows of these weights. What is truly being traded is no longer a clear policy path, but rather the entire process of these two conflicting narratives gaining and losing ground over the coming months.

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