Fed's "Megaphone": Inflation Cooling Eases Rate Hike Pressure, Hawkish Voices Have Not Yet Faded

TechFlow news, August 12, "Fed mouthpiece" Nick Timiraos stated: "The July inflation report was broadly in line with market expectations, easing pressure on the Federal Reserve to raise interest rates next month. Wall Street is paying particular attention to the CPI data released today, as Federal Reserve officials have also signaled that they are watching this data more closely. Over the past year, Federal Reserve officials have consistently expected that inflation would fall back to the 2% target level without the need for further rate hikes, but now some officials believe it is necessary to maintain higher interest rates.

Other officials stated that if more data makes the current forecast difficult to sustain, they may also join this hawkish minority camp. This forecast is built on the view that current interest rate levels are already sufficiently restrictive, and the reason for persistently high inflation lies in external shocks, rather than monetary policy being too loose. The previous judgment was that tariffs would only push up costs on a one-off basis, and the impact would gradually fade thereafter; as Middle East tensions eased, energy prices would also fall in tandem with crude oil prices. But the actual situation is that these shocks persist, and now they are combined with the surge in demand brought about by the AI infrastructure boom, the latter of which is pushing up prices for high-tech equipment and software." (Jin10)