"Federal Reserve's Megaphone": The internal "unity" of the Federal Reserve is no longer, and an era of divergence may be approaching

ChainCatcher news, according to Jinshi Data reports, "Fed mouthpiece" Nick Timiraos recently stated that a debate is brewing within the Federal Reserve on how to respond to the risks posed by Trump's tariffs, which could end a relatively united period, as officials may disagree on whether the new cost increases justify keeping interest rates high.

In recent weeks, Fed Chairman Powell has hinted that the threshold for rate cuts may be lower than it appeared this spring, although a rate cut is not expected this month. Instead, Powell outlined a "middle path": if inflation data comes in below expectations or the job market shows slight weakness, this may be enough for the Fed to initiate rate cuts before the end of summer. This standard is lower than the previously stricter threshold—at that time, against the backdrop of significant inflation expectations triggered by larger tariff hikes, the Fed might have required more evident signs of economic deterioration before considering a rate cut.

The tariff increases announced by Trump in April exceeded expectations, raising concerns about stagflation due to weakened economic growth and rising prices, disrupting the Fed's plans to resume rate cuts this year. However, since then, two developments have driven a possible shift. First, Trump has rolled back some of the most extreme tariff increases; second, the consumer price increases related to tariffs have yet to materialize. This provides a critical test for the competing theories regarding whether tariffs will lead to inflation and has sparked internal disagreements on how to manage forecasting errors.