The Federal Reserve's recent signal of 'holding steady' has been made crystal clear by Harmack's shout — September rate cut? Not a chance! 😂 As the president of the Cleveland Fed and a hawkish leader, she directly doused the market with cold water: inflation is still hovering above 3%, and core service prices are sticking like chewing gum; there's no reason for a rate cut.
Look at the latest data: July's core CPI year-on-year is 3.1%, PPI skyrocketed by 0.9% month-on-month, and even used car prices are rebounding. Harmack's keen eyes have already spotted these 'tails of inflation', especially the rising prices in housing and medical services, fearing that a rate cut would give inflation a new lease on life. Even more striking, she brought up tariffs as a 'time bomb' — if Trump suddenly increases tariffs, companies might not withstand the cost transfer, and inflation could stage a 'counterattack' in no time.
However, the market isn't buying it, with a 93.8% probability betting on a 25 basis point cut in September, and some even fantasizing about a 'shock' of 50 basis points. It’s no wonder, as July's non-farm employment plummeted to 73,000, with the previous value cut by 100,000, and the unemployment rate quietly crept up to 4.2%. But Harmack isn't having any of it: 'Weak job market? That's just a smokescreen from data revisions!' She places more importance on wage growth still above 4% and consumer spending's resilience at 0.5% month-on-month — in short, people still have money in their pockets, and the economy isn't in the 'ICU'; why rush into a rate cut?
The most interesting thing is the 'palace intrigue' within the Federal Reserve: the dovish Waller and Bowman are clamoring that 'if we don't loosen up, employment will collapse', while the hawkish Goolsbee and Harmack insist that 'as long as inflation persists, rate hikes will continue'. But Harmack has a trump card — the Cleveland Fed she represents is the most aggressive institution in tracking inflation in the entire U.S., even accounting for the lagging effects of rising rents. With this strong output, she clearly aims to put the brakes on the doves, to prevent Powell from accidentally releasing easing signals at the Jackson Hole annual meeting.
In short, Harmack's tactic is called 'defense by offense': she first lays down the law that a September rate cut is off the table, to prevent excessive market speculation; simultaneously, she gives companies and investors a warning — don’t think you can rely on rate cuts to survive; just honestly digest the high interest rates. As for the final outcome? It depends on whether the August CPI and non-farm data will be favorable.#杰克逊霍尔会议 #美国初请失业金人数