Tariffs, Inflation, and Interest Rate Cuts: The Federal Reserve's "Balancing Act"

The Federal Reserve walks a tightrope between inflation and employment, with Daly's remarks hinting at a forthcoming interest rate cut, where timing is crucial.

【Policy Signal】Interest Rate Cut Code Has Been Unlocked

San Francisco Fed President Daly's statement is significant: she acknowledges that tariffs have pushed up inflation but emphasizes that the impact is "transitory." She clearly states that policy needs to be "recalibrated" to avoid excessive tightening that could harm the job market, which amounts to a clear "interest rate cut forecast."

【Policy Shift】Employment Priority Becomes Consensus

The Federal Reserve faces a dual-target dilemma:

• Inflation: Tariffs cause short-term disruptions

• Employment: Rising unemployment threatens the economy

The underlying message is clear: it is better to cut interest rates early to prevent unemployment than to be overly cautious and risk a hard landing.

【Market Impact】Risk Assets Benefit

Dovish signals boost the market:

• Expectations of interest rate cuts enhance liquidity

• Cryptocurrencies will benefit

• Beware of "expectation fulfillment" volatility

Qingyao reminds: The timing for positioning has arrived

The Federal Reserve shifts from "fighting inflation" to "promoting growth," which is strategically favorable for cryptocurrencies. In the short term, rate cuts will push BTC to break through, while in the long term, liquidity expansion reignites the narrative against depreciation. However, vigilance is needed regarding volatility caused by data and expectation management.

I am Qingyao, interpreting the crypto space from a macro perspective. Click to follow, and let me help you see the opportunities in the crypto market! #币安HODLer空投MITO

(This article represents personal views and does not constitute investment advice)