TechFlow, July 31 — According to Jinshi Data, a CICC research report stated that the Fed's decision to hold rates steady at its September meeting aligns with market expectations. Two board members opposed maintaining the current rate, but Powell and the majority of officials lean toward continued tightening: they believe inflationary risks from tariffs have not yet dissipated and the labor market remains solid, thus conditions for rate cuts are not met. Powell also emphasized the Fed's independence, suggesting it would not yield to political pressure. We believe the inflationary impact of tariffs will become more evident in the coming months, making a rate cut unlikely in September; if Trump escalates tariffs further, the timing for rate cuts could be delayed even longer. As for Trump pressuring for rate cuts, we think the market underestimates the Fed's resolve to uphold its independence. Monetary policy decisions are made collectively by 12 voting members, so even if Trump were to dismiss Powell, it would be difficult to alter the policy trajectory.
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