Just as May began, several significant events have already occurred in the U.S. financial market, leading to widespread skepticism about the Federal Reserve's interest rate hike actions.

Finally, the dust settled in the early hours of today, with the Federal Reserve ultimately deciding to raise interest rates by 25 basis points.

However, unexpectedly, Powell's subsequent remarks claimed that there is still no intention to pause interest rate hikes. U.S. stocks suddenly plummeted in the final stretch, and international crude oil prices even fell by as much as 7%.

01. Caught in a Dilemma

Although everyone anticipated that the Federal Reserve would raise interest rates this time, different news emerged just before the interest rate meeting, potentially affecting the final decision.

Firstly, employment data showed a strong increase, the largest growth since last July, with the number of employed individuals reaching nearly 300,000. This inevitably leads to inflation being difficult to decrease in the short term, and the Federal Reserve can only continue to raise interest rates to control inflation.

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Secondly, the First Republic Bank in the U.S. suddenly triggered the second wave of bank bankruptcies at this time, forcing the Federal Reserve to consider pausing interest rate hikes to save the economy.

The Federal Reserve faced this interest rate meeting amidst a series of contradictory news, with everyone previously predicting that the Federal Reserve would raise interest rates once more, but also discuss stopping interest rate hikes in the future. However, the former was correctly guessed, while the latter was unexpectedly different.

02. The Second Wave of Bankruptcies

In fact, the emergence of this situation in the U.S. is mainly due to the Federal Reserve's initial lack of emphasis on inflation. It can be said that the Federal Reserve should have been the party responsible from the start.As early as the second half of 2021, signs of inflation in the United States were already very apparent, but both the White House and the Federal Reserve turned a blind eye to it.

The most serious time that shook the status of the US dollar was the US's economic strike against Russia, which caused global oil prices to rise rapidly, further pushing up inflation in the United States.

Subsequently, oil-producing countries also reduced oil production, leading to further increased costs of oil in the United States and exacerbating US inflation.

Later, to curb inflation, the Federal Reserve quickly raised interest rates in a short period, even raising rates four times in a row, totaling 300 basis points.

The collapse of Silicon Valley Bank was essentially the result of the Federal Reserve's loose monetary policy, coupled with continuous interest rate hikes.

03, The Federal Reserve's surprising statement

But the United States is still raising interest rates, which is intriguing.

Because just before this interest rate hike, another large US bank went bankrupt. Just after the interest rate hike was announced in the early morning, another bank, West Pacific United Bank, fell by 45% after trading.

A similar scene reappeared again, in March, Silicon Valley Bank's stock price fell sharply, and at the end of April, the stock price of the First Republic Bank fell sharply, and both banks eventually went bankrupt.

West Pacific United Bank is likely to find it difficult to escape this fate.The second wave of bank bankruptcies in the United States has officially begun.

Since the current bank bankruptcies are mainly caused by interest rate hikes, the wave could potentially be curbed if the Federal Reserve could pause the rate hikes.

However, the issue is that Powell unexpectedly declared last night that the Federal Reserve has not decided to pause interest rate hikes in the future, implying that there is no exclusion of continuing to raise interest rates in June.

Following his speech, the U.S. stock market shifted from a previous rise to a sudden decline, with the Dow Jones Industrial Average falling for three consecutive days.

The price of WTI international crude oil futures also plummeted nearly 7% after the opening, touching a low of $63, which is the lowest international oil price in nearly a year and a half.