TechFlow, July 31 — According to Jinshi Data, China Merchants Securities' macro research report analyzed that Powell remains concerned about stagflation risks, meaning the Fed will find it difficult to cut rates as long as the inflation gap exceeds the employment gap.
In June, the Fed provided forward guidance on stagflation risks, and this tone continued into July. Powell's concern over "inflation" is clearly greater than his concern over "stagnation." The most important statement was: "Current inflation is above target levels while employment is at target levels, therefore policy should remain moderately restrictive." Powell needs to confirm that the inflationary impact from tariffs has been fully reflected.
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