The Fed's recent signal of "holding steady" has been made crystal clear by Harker's shout - a rate cut in September? 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 a piece of bull's hide, so what’s the reasoning behind a rate cut? Take a look at the latest data: July's core CPI year-on-year at 3.1%, PPI soaring month-on-month to 0.9%, and even used car prices are rebounding. Harker's keen eye has long been on these "inflation tails", especially the rising prices of housing and medical services, fearing that a rate cut would give inflation a new lease on life. What’s more, she has also brought up tariffs as a "time bomb" - if Trump suddenly ramps up tariffs, companies might not withstand the cost transfer, and inflation could stage a "counterattack" in no time.

However, the market is not buying it, with a 93.8% probability betting on a 25 basis point rate cut in September, and some even fantasizing about a "shock" of 50 basis points. It's no wonder that non-farm employment in July plummeted to 73,000, with the previous figure cut by 100,000, and the unemployment rate quietly creeping up to 4.2%. But Harmak is not buying into this at all: "A weak job market? That's just a smoke screen from data revisions!" She is more concerned that wage growth is still above 4% and that consumer spending has shown resilience with a month-on-month increase of 0.5% — in other words, people still have money in their pockets, and the economy hasn't reached the "ICU" stage, so why rush into rate cuts?

The most interesting part is the "palace intrigue" within the Fed: dovish Waller and Bowman are shouting that "if we don't loosen up, employment will collapse," while hawkish Goolsbee and Harker insist that "as long as inflation persists, interest rate hikes will continue." However, Harker has a trump card—she represents the Cleveland Fed, which is the most aggressive institution in the U.S. when it comes to tracking inflation, clearly accounting for the lagging effects of rising rents. This time, she is strongly pushing back, clearly aiming to put the brakes on the dovish camp, to prevent Powell from accidentally signaling easing at the Jackson Hole annual meeting.

In simple terms, Hamak's strategy is called "defense by offense": first, lay it out that there's no chance of a rate cut in September to prevent excessive speculation in the market; at the same time, give 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.