Zhongjin: Core inflation rebound may exacerbate internal divisions within the Federal Reserve.

The research report from Zhongjin Company pointed out that the core CPI in the United States rose by 0.3% seasonally adjusted in July, rebounding from 2.9% to 3.1% year-on-year, higher than market expectations; the overall CPI rose by 0.2% month-on-month, and remained at 2.7% year-on-year, slightly lower than expected. Looking at the sub-items, inflation in July showed a moderate increase in goods and a rebound in services: tariffs costs are still being passed on to the retail end, but some prices have also fallen. Some service prices that had previously fallen have turned into increases, increasing the stickiness of inflation. We maintain our previous judgment that inflation in the United States will enter a phase of structural upward movement. For the Federal Reserve, the core CPI has not converged towards the 2% target, but has returned to above 3%, moving further away from the target. This may increase internal divisions within the Federal Reserve, making it difficult for them to reach a consensus on policy decisions. The uncertainties in the monetary policy path will increase significantly, and market volatility will intensify.