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CMB Macro: Fed Difficult to Cut Rates as Long as Inflation Gap Exceeds Employment Gap
Summary: According to CMB Macro research cited by Jinshi data, Powell still worries about stagflation risks, meaning that the Fed will find it difficult to cut rates as long as the inflation gap exceeds the employment gap. In June, the Fed gave a forward-looking judgment on stagflation risks, continuing this tone in July. Powell's concern about ...
According to CMB Macro research cited by Jinshi data, Powell still worries about stagflation risks, meaning that the Fed will find it difficult to cut rates as long as the inflation gap exceeds the employment gap. In June, the Fed gave a forward-looking judgment on stagflation risks, continuing this tone in July. Powell's concern about 'inflation' is clearly higher than his concern about 'stagnation', with the most important statement being 'current inflation is above the target level, employment is at the target level, so policy should remain moderately restrictive'. Powell needs to confirm that the inflation impact of tariffs is fully reflected.
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Link: CMB Macro: Fed Difficult to Cut Rates as Long as Inflation Gap Exceeds Employment Gap [Copy]
