"The Federal Reserve (FED) Megaphone": The internal "unity" of the Federal Reserve is no longer, and an era of divergence may be approaching.

On July 10, Nick Timiraos, a reporter from The Wall Street Journal known as the "mouthpiece of the Federal Reserve," published an article indicating that an internal debate is brewing within the Federal Reserve on how to respond to the risks posed by Trump's tariffs, which may end a relatively unified period. Officials may diverge on whether the new rise in costs justifies keeping interest rates high. In recent weeks, Federal Reserve Chairman Powell has hinted that the threshold for rate cuts may be lower than it appeared this spring, but a rate cut is not expected this month. Instead, Powell outlined a "middle path": if inflation data comes in lower than expected or if the labor market shows slight weakness, this may be enough for the Federal Reserve to initiate rate cuts before the end of summer. This standard is lower than the previously stricter threshold, where the Federal Reserve may have required more obvious signs of economic deterioration before considering rate cuts against the backdrop of heightened inflation expectations due to larger tariff increases. The scale of the tariff increases announced by Trump in April exceeded expectations, raising concerns about stagflation marked by weakened economic growth and rising prices, disrupting the Federal Reserve's plan to resume rate cuts this year. However, since then, two developments have driven a possible shift. First, Trump has reduced some of the most extreme tariff increases; second, the consumer price increases related to tariffs have not yet materialized. This provides a key test for the competing theories about whether tariffs will lead to inflation and has triggered internal disagreements on how to manage forecasting errors. (Jin10)