China Merchants Macro: The Fed will find it difficult to cut interest rates as long as the inflation gap is higher than the employment gap

According to Jinshi Data, citing a China Merchants Macro Research report, Powell is still concerned about the risk of stagflation, meaning that the Federal Reserve will find it difficult to cut interest rates as long as the inflation gap is higher than the employment gap. In June, the Federal Reserve gave a forward-looking assessment of the risk of stagflation, and continued this tone in July. Powell's concern about "inflation" is significantly higher than his concern about "stagnation." The most important statement is that "current inflation is above the target level, and employment is at the target level, so policies should remain moderately restrictive." What Powell needs to confirm is that the tariff inflation shock is fully reflected. [ChainCatcher]