Guosheng Securities: Global Liquidity Likely to Gradually Tighten

Ask AI · How does the oil price shock affect the Fed’s interest rate cut expectations?

According to a research report from Guosheng Securities on March 20, the Federal Reserve continued to pause interest rate cuts as scheduled, with only one dissenting vote. The dot plot shows the expected interest rate path for the year remains unchanged, but disagreements have widened (“hawks” and “doves” both increased). The meeting statement particularly emphasized the uncertainty of the Middle East situation’s impact on the U.S. economy. During the press conference, Powell repeatedly highlighted the effects of the oil price shock, stating that this year’s U.S. GDP growth, unemployment rate, and inflation uncertainties have increased. Notably, Powell also revealed that the discussion of future rate hikes took place during this meeting. After the meeting, the latest Fed rate cut expectations sharply declined, with expectations of fewer than one cut this year, and the market is betting on no rate cuts this year. Overall, the Fed in the short term can only strengthen its wait-and-see stance amid rising uncertainties, closely monitoring changes in the oil price center and the duration of high oil prices. The prevailing view is that: the Iran situation has lasted over three weeks with no signs of rapid easing, indicating that energy prices such as crude oil and natural gas will likely remain high. Under the scenario of “rising oil prices—inflation rising—Fed pausing or even raising rates—stagflation risk increasing,” it suggests that global liquidity may gradually tighten and continue to suppress market risk appetite. Investors should be cautious of the potential for a deep correction in the stock market.

Daily Economic News