Fed Rate Hike: Stagflation Threatens US Economy

According to the report on March 5, U.S. President Donald Trump has initiated import tariffs on Canada and Mexico. According to Moody's chief economist Mark Zandi, the U.S. economy may fall into a state of stagflation. Recent data shows that U.S. consumers and businesses have become concerned about the economic outlook and have reduced spending. The consequence could be a significant decline in the economy, coupled with high inflation due to the impact of tariffs, leading to the risk of stagflation - something that has not happened in the past 50 years. According to the Atlanta Federal Reserve's GDPNow model, the U.S. economy may decline by 2.8% in the first quarter, which will be the first decline since the first quarter of 2022. In the context of the risk of stagflation, the Federal Reserve may raise interest rates, similar to the actions of former Chairman Paul Volcker in the early 1980s, accepting economic sacrifice to control inflation. Despite the volatility in the financial markets, such political developments continue to create new challenges for monetary and cryptocurrency policies, highlighting the importance of caution in investment decisions. Note: This content is intended to provide market information and is not investment advice.