Institution: The Federal Reserve has limited room to cut rates in a "stagflation-like" environment, and any rate cut is likely to be delayed until the second half of the year

BlockBeats News, March 19th - CF40 Research Report stated that the Fed kept interest rates unchanged at the March meeting, in line with market expectations. The dot plot and economic projections indicate an upward revision in inflation expectations and a narrowing room for rate cuts, with an overall policy stance leaning towards caution. Although Powell believes there is high uncertainty from oil price shocks and the economy remains resilient, CF40 believes the actual situation is more complex.

Tariffs and immigration policies have already constrained supply, coupled with oil price shocks, the U.S. economy is entering a phase of "stagflation-like" scenario. At the same time, private credit risks are emerging, and financial conditions may tighten spontaneously.

In this context, the Fed is currently constrained by inflation stickiness in the short term and may remain on hold; in the medium term, as demand weakens or financial risks escalate, there will be passive pressure for a policy shift towards rate cuts. CF40 expects the Fed to keep rates unchanged in the first half of the year, with a delay in resuming rate cuts until the second half. However, if a rate cut is a passive response to a deteriorating economic or financial environment, it will also be difficult to boost market risk appetite. (FXStreet)