The Fed's "echo chamber": Inflation cooling alleviates interest rate hike pressures, but hawkish voices have not faded.

Nick Timiraos, the "voice of the Federal Reserve," stated, "The July inflation report was largely in line with market expectations, easing the pressure on the Federal Reserve to raise interest rates next month. Wall Street is particularly focused on the CPI data released today, as Federal Reserve officials have signaled that they are paying closer attention to this information. Over the past year, Federal Reserve officials have anticipated that inflation would decline to the 2% target level without the need for further interest rate hikes, but now some officials believe it is necessary to maintain higher rates. Other officials have indicated that if more data makes the current forecasts difficult to sustain, they may also join this hawkish minority. This forecast is based on the view that current interest rate levels are already sufficiently restrictive, and that the reasons for persistently high inflation lie in external shocks rather than overly loose monetary policy. The previous judgment was that tariffs would only cause a one-time cost increase, and that subsequent impacts would gradually fade; with the easing of tensions in the Middle East, energy prices would also follow crude oil prices down. However, the reality is that these shocks persist, and now they are compounded by the surge in demand driven by the AI development boom, which is pushing up prices for tech equipment and software."