1. The Federal Reserve's internal tendency is to cut interest rates, with tariffs as an obstacle
This statement clearly indicates that within the Federal Reserve, there is already a strong tendency to relax monetary policy regarding the current economic situation. From the perspective of inflation data, the degree of improvement in current data has actually reached the 'interest rate cut threshold' set by the Federal Reserve. However, the powerful disruptive factors from the outside, namely Trump's tariff policy, act like an insurmountable barrier, forcing the Federal Reserve to remain inactive even if there is an intention to cut rates. This situation highlights the extremely complex and difficult trade-offs the Federal Reserve faces in formulating monetary policy, as it must consider not only the core indicators of the domestic economy but also address the uncertainty shocks brought about by external policies.
2. The Federal Reserve's shift in inflation perspective
(1) Comparison of old and new inflation frameworks
For a long time, the traditional inflation framework upheld by the Federal Reserve has considered that inflation is primarily driven by monetary factors or demand-side factors. Under this concept, regulating the money supply and stimulating or suppressing demand have become the core means for the Federal Reserve to address inflation. However, with profound changes in the global economic landscape, new realities are emerging. External shocks, such as supply chain disruptions, adjustments in tariff policies, and geopolitical conflicts, are gradually evolving into key new variables affecting inflation. This means that the mechanism for inflation formation has become more diverse and complex, no longer confined to the categories recognized by the traditional framework.
(2) Potential adjustments in decision-making models
Based on changes in inflation views, the Federal Reserve's decision-making model may undergo significant changes in formulating future monetary policy. It may become more flexible, no longer rigidly relying on a single core CPI/PCE indicator for decision-making. However, this shift also comes with certain risks, potentially leading to relatively lagging policy adjustments. Because it is necessary to comprehensively consider numerous complex external factors, more time and effort will undoubtedly be required in data collection, analysis, and assessing the impact of various factors on inflation, which increases the difficulty and complexity of policy formulation.
3. Short-term market impact: Risk assets may face repricing
In the short term, since the Federal Reserve has already established interest rate cut conditions internally, and inflationary pressures are showing a downward trend, this is likely a positive signal for risk assets, potentially prompting a repricing of risk assets. Once the market forms stable expectations of an impending interest rate cut by the Federal Reserve, investors' risk appetite may increase, and funds may gradually flow from relatively conservative asset allocation areas into risk asset areas, such as stocks and cryptocurrencies. This will inject new vitality into the risk asset market, prompting adjustments in its price structure and valuation system to reflect new macroeconomic expectations.
4. Key variables to watch out for
(1) Risk of tariff increases being implemented
If Trump's tax increase plan is officially implemented, its impact on the global supply chain will be significant. Each link in the supply chain, from raw material procurement, production processing to product transportation and sales, will see a substantial increase in costs. This increase in costs will be transmitted layer by layer, ultimately triggering a new round of input-driven inflation. For the cryptocurrency market, input-driven inflation may disrupt the existing operational logic of the market. On one hand, rising inflation may change investors' demand for cryptocurrencies as a store of value; on the other hand, the macroeconomic environment may deteriorate due to inflation, potentially leading to an overall contraction in market liquidity, putting pressure on the cryptocurrency market.
(2) Volatility impact on the U.S. Treasury market
Current market expectations for interest rate cuts are in constant flux, while U.S. fiscal spending continues to rise. These two factors intertwine and are very likely to trigger significant volatility in U.S. Treasury yields. As a key benchmark asset in the global financial market, substantial fluctuations in Treasury yield can have widespread spillover effects. In the current context of increasing links between the cryptocurrency market and traditional financial markets, fluctuations in Treasury yields may lead to rapid flows of capital between different asset classes. When Treasury yields fluctuate significantly, investors may adjust their asset allocation for hedging or to pursue higher returns, thereby impacting the liquidity of the cryptocurrency market and affecting the stability of cryptocurrency prices.
(3) The dilemma of the Federal Reserve's dovish stance
From the current discussions within the FOMC, there is already a certain consensus on 'not taking action' regarding interest rate cuts. This places the market in a state of 'easing is in sight but hard to realize.' In this state, investors find it difficult to form stable expectations, and market sentiment can easily become anxious and sensitive. Any slight disturbance may trigger significant fluctuations in the market, leading to wide-ranging oscillations. For the cryptocurrency market, which is already characterized by high volatility and sensitivity, the situation where the Federal Reserve's dovish policies are difficult to implement will undoubtedly further exacerbate price instability and increase trading risks for investors.#美联储FOMC会议