PANews reported on March 12 that according to Jinshi, Bill Dudley, former chairman of the New York Fed and current member of the Coinbase Global Advisory Board, wrote that the current market seems to believe that slowing growth will be the dominant factor. Despite the sharp decline in US stocks, market expectations for the Fed's interest rate cuts have continued to heat up, suggesting that investors believe that price increases caused by tariffs will not tie the Fed's hands. According to this logic, the Fed will regard rising inflation as a temporary phenomenon and support the economy by cutting interest rates. However, there are major loopholes in this narrative in two aspects. First, the impact of the economic slowdown on labor market slack and downward pressure on wages may be less than expected. Second, if tariffs push up inflation expectations, the Fed will find it difficult to ignore the price pressures caused by them. This time, the tariff increase has doubled. What's worse, after years of failure to meet the target, this move may further delay the Fed's progress in achieving its 2% inflation target.

The triple blow of declining growth potential, rising prices and rising inflation expectations is not a good omen for the market: slower growth will suppress corporate profits and drag down US stocks; the Fed's hesitation to cut interest rates will hit the bond market; and increased uncertainty will put pressure on both. Dudley expects this unfavorable outlook to be reflected in the economic forecasts released by the Federal Reserve after its monetary policy meeting next week: output growth expectations will be lowered and inflation expectations will be raised, but the path of the unemployment rate will change limitedly as job growth and labor force expansion slow in tandem. The median forecast of two 25 basis point rate cuts in 2025 is likely to remain unchanged.