#美联储3月利率决议 #美国加征关税
'Fed mouthpiece' Nick Timiraos pointed out that in a wait-and-see mode, the Federal Reserve has quietly initiated a strategic shift.

At 2 a.m. Beijing time on Thursday, the Federal Reserve will announce its latest interest rate decision and economic forecasts. 'Fed mouthpiece,' Wall Street Journal reporter Nick Timiraos wrote again, stating that Federal Reserve officials will maintain stable interest rates, but beneath the surface, their strategies are changing.

In the Federal Reserve's new quarterly economic forecast, most officials are expected to anticipate one or two rate cuts this year. At first glance, this indicates that there has been little meaningful change in the interest rate outlook since the last forecast in December, when most officials expected two rate cuts.

Timiraos stated that these forecasts are a highly watched topic on Wall Street, but they likely mask how the Federal Reserve's wait-and-see mode has undergone a significant reset due to the expansionary threats of the trade war leading to rising prices.

The Federal Reserve can lower interest rates due to good news (declining inflation), as was the case last year, or due to bad news (economic sluggishness).

Compared to seven weeks ago when Federal Reserve officials last met, it seems more likely that Trump will raise tariffs across the board, making the rationale for the first rate cut less compelling.

Tariffs are an economic shock that can suddenly reduce the economy's ability to supply goods or services, leading to price increases while weakening economic growth. Imposing tariffs on imported goods may disrupt interrelated global supply chains, and due to their arbitrary implementation, it may suppress new investments before companies have a clearer understanding of their fundamental cost structures.

Wells Fargo Chief Economist Jay Bryson said, 'This puts the Federal Reserve in a dilemma. If inflation rises, you want to tighten policy. On the other hand, if unemployment rises, you want to loosen it.'

Recently, consumer sentiment has declined, as Trump’s senior advisors have expressed a willingness to tolerate short-term weaknesses in financial markets or the economy, as well as high-profile cuts to federal workers. Additionally, the effects of the Federal Reserve's past interest rate hikes continue to chill certain parts of the U.S. economy, including manufacturing and housing.

Federal Reserve officials have experience dealing with trade wars in recent years, as Trump imposed tariffs during his first term. At that time, the Federal Reserve preemptively lowered interest rates to support economic growth. Due to the low inflation rate at that time, the Federal Reserve could afford to do so.

In contrast, the scale of this round of tariffs is larger than the previous round. Moreover, inflation rates have been above the Federal Reserve's target for the past four years.

Companies are spending more time considering when and to what extent they can pass on higher costs to customers. Michael Reid, a senior U.S. economist at RBC Capital Markets, said, 'In 2019, they really didn't consider this issue.'

Several Federal Reserve officials stated that they would be more cautious if there are signs that the public begins to expect inflation to persist. Officials are particularly focused on ensuring that consumers and businesses expect inflation rates to remain low, as these expectations can become self-fulfilling.

Former Boston Fed President Eric Rosengren said, 'I expect the Federal Reserve to remain on hold and not take too much action over the next six months.' He said he previously expected that tariffs would keep the Fed on hold for most of this year. However, he also expressed surprise that the magnitude of the tariffs that have already taken effect and those that seem likely to take effect is greater than he anticipated.

The Federal Reserve's interest rate predictions are not easy to capture potential outcomes that may lead to a rate cut or the Fed remaining on hold. Philadelphia Fed President Patrick Harker stated last month that when he had to submit a report last December, he was 'hesitant between one and two rate cuts.' He said in an interview, 'I can't just submit a report for 1.5 cuts.'

Since then, predictions have become increasingly difficult. Harker said, 'Uncertainty will be very high. We people in the industry cannot be sure what will happen.'