China Merchants Macro: As long as the inflation gap is higher than the employment gap, the Federal Reserve will find it difficult to cut interest rates

ChainCatcher news, according to a report from Jinshi Data citing a research report from China Merchants Macro, Powell still worries about the risk of stagflation, which means that as long as the inflation gap is higher than the employment gap, the Federal Reserve will find it difficult to cut interest rates.

In June, the Federal Reserve provided a forward-looking judgment on the risk of stagflation, and in July, it continued this tone. Powell's concern about "inflation" is clearly higher than his concern about "stagnation." The most important statement is that "current inflation is above the target level, employment is at the target level, therefore policy should remain moderately restrictive." What Powell needs to confirm is that the tariff inflation shock is fully reflected.