Federal Reserve Mouthpiece: If it weren't for the risks posed by tariffs, the Federal Reserve would be ready to cut interest rates this week
Key Points Breakdown
1. If it weren't for tariff risks, a rate cut should have occurred this week
This indicates that there is already a sufficient inclination within the Federal Reserve to relax monetary policy given the current economic situation;
The current improvement in inflation data has reached the 'rate cut threshold', but external disturbances (Trump's tariffs) have forced it to 'hold steady'.
2. The view on inflation has changed
Old framework: Inflation is driven by money or demand;
New reality: External shocks (such as supply chains, tariffs, geopolitical issues) are the new variables affecting inflation;
The Federal Reserve may become more flexible or lagging in the future, no longer making decisions based solely on the core CPI/PCE indicator.
Short-term impact: The Federal Reserve has met the conditions for a rate cut, and declining inflation pressure is expected to drive a repricing of risk assets, restoring market expectations;
Variables to watch out for:
Implementation of tariff increases: If Trump's tax increases are officially implemented, supply chain costs will rise significantly → A new round of imported inflation may disrupt the market;
Volatility in the U.S. Treasury market: Changes in rate cut expectations + rising U.S. fiscal expenditures could trigger severe fluctuations in Treasury yields, impacting cryptocurrency liquidity;
Dovish stance of the Federal Reserve may be hard to realize: A consensus within the FOMC on 'not taking action for now' will keep the market in a state of 'easing in sight but difficult to realize', leading to wide fluctuations in the market;