#MyQixiTradingShare

Title: The Fed at an Impasse: The “Voice” Said “Dovish,” but the “Hawks” Are Still Awake. Why Are Markets in Turmoil?

Yesterday’s July inflation report (CPI) pleased Wall Street with figures close to ideal. It seemed the rate-hike stick had been put aside. But don’t rush to open the champagne.

The Federal Reserve’s authoritative “voice,” Nick Timiraos (not to be confused with an official decision!), sent an alarming signal: pressure has eased, but the “hawkish” cap remains on the heads of many regulators.

Why can’t the Fed breathe easy even when the figures are good? Here are the 3 main reasons turning the inflation puzzle into a detective story:

1. A split within the system. A year ago, everyone believed rates would bring down inflation and we would return to the 2% target. Now, some officials are demanding that rates be “held and raised,” while others are ready to join that camp if the next data comes in “hot.” The consensus has collapsed.
2. The curse of “external factors.” Inflation was blamed on “one-off shocks”: tariffs and the Middle East. The expectation was that prices would jump and then settle down. In reality, these factors have become chronic, and a third one has been added—the AI boom.
3. An unexpected player—Artificial Intelligence. While we talk about chips and software, the Fed sees an inflationary risk in this. Huge demand for technological equipment for data centers is driving up prices in the services and equipment sectors, fueling the rising cost of money.

The essence of the dilemma:
The Fed is trying to believe that current high rates are “sufficiently restrictive” and that inflation will settle down on its own. But reality stubbornly shows the opposite: cheap money is a thing of the past, and it may not return even if the rhetoric becomes more accommodative.

What’s next?
Markets were expecting a pause in September. And most likely, they will get it. But the question is: will the Fed be able to refrain from fresh “hawkish” attacks through the end of the year if the AI boom continues driving up the prices of hardware and software?

A weak voice calling for cuts is not yet a victory over the “hawks.” It is merely a breather. Watch closely.