Federal Reserve signals a change in stance? The labor market becomes the new focus, and inflation is expected to decline next year

Question

【Blockchain Rhythm】The recent statement from the President of the Philadelphia Fed has attracted quite a bit of attention. She emphasized that the current biggest concern is not actually inflation continuing to rise, but rather that the labor market may remain weak — this shift is worth pondering.

Specifically, she believes that as the impact of tariffs gradually diminishes next year, inflation is very likely to decline gradually. In other words, the market doesn’t need to overly worry about a spiral of inflation. What does this judgment mean for crypto assets? A moderation in inflation expectations generally benefits risk assets.

From a monetary policy perspective, she emphasized that the current policy remains somewhat restrictive. After three cumulative rate cuts totaling 75 basis points, combined with the cumulative effects of the tightening cycle, it is theoretically sufficient to bring inflation back to the 2% target. But there’s a subtle point — she used an interesting phrase: the labor market is “bending but not broken.”

In simple terms, inflation may no longer be the main issue; preventing further deterioration of the labor market is the top priority. This adjustment in policy priorities might mean that the rate cut cycle could be more moderate than expected for the crypto space, but it also reduces the risk of a hard landing. In the long run, this balanced stance offers a lesson for asset allocation: focus on labor data and tariff trends, rather than fixating on inflation numbers.

WhaleSurfer · Accepted Answer

The labor market curve is not breaking, which is quite interesting. It feels like it's paving the way for subsequent interest rate cuts. A moderation in inflation is indeed a positive signal for the crypto space.

MissedTheBoat · Answer

Inflation isn't as scary anymore, but when it comes to the labor market... it feels like the real hidden danger.

UnruggableChad · Answer

The Federal Reserve shifts focus to the labor market, and the easing of inflation expectations is indeed a positive factor for this round of market rally in the crypto space.

BakedCatFanboy · Answer

The easing of inflation is indeed good news for the crypto market, but we really need to be cautious about the weakening labor market.

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"Bent but not broken"... This wording is quite interesting, it feels like the Federal Reserve is leaving a foreshadowing for subsequent actions.

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A 75 basis point rate cut and still worrying about employment, it seems the water is deeper than expected.

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Tarriffs receding and inflation falling back? Let's talk about that when the time comes, for now just listen.

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It's really outrageous if next year's inflation can drop back to 2%, who would believe such cautious optimism?

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The labor market is the real trap; this round in the crypto space might once again depend on whether Americans can keep their jobs.

GasFeeTears · Answer

The easing of inflation is indeed good news for the crypto world... but the labor market is the real hidden risk.

StealthMoon · Answer

Is the labor market bend not breaking? That wording is quite interesting; it feels like paving the way for subsequent policy adjustments. The decline in inflation is indeed good news for the crypto world, but I'm worried about another reversal.