Economic data has given us a clear answer. US Q3 GDP growth reached 4.5% annualized, far exceeding market expectations, which supports the Federal Reserve's current policy stance. But there is a more complicated issue behind this: inflation.

Inflation was only 2.3% at the beginning of the year, and now it has risen to 2.9%. The recent estimates from the Cleveland Fed are even more exaggerated, with annualized inflation exceeding 3%. These are not small numbers.

Some advocate for significant rate cuts to stimulate the economy, but the data is clear—economic growth is not lacking, and instead, inflation is burning. If short-term interest rates are pushed down as required, the risk of an overheated economy and runaway inflation will immediately arise. The most direct victims are fixed-income earners and the real estate market.

The market has long sensed this. Just look at gold and silver—gold has risen 65% in a year, silver 85%, both approaching historical highs. This is not idle money speculation; it is the market's genuine response to inflation expectations.

Another key detail that is often confused: the federal funds rate and long-term interest rates are not the same. The short-term rate controlled by the Federal Reserve mainly affects borrowing costs, but long-term rates like the 10-year Treasury are set by the bond market. That’s why rate cuts sometimes don’t have an immediate effect.

What’s more worth paying attention to is the change in May next year. The current chair’s term will expire, and will the new appointee continue to maintain the Fed’s independence, or will they compromise under political pressure? The situation in 2026 is truly concerning.