Recently, the fluctuation in U.S. economic data has sparked heated discussions in the market regarding the direction of the Fed's monetary policy. Cleveland Fed President Harker recently made a series of tough statements, pouring cold water on the market's widespread expectation of a rate cut in September.

Harmack pointed out that the current inflation rate is still above 3%, and core service prices remain high, factors that do not support a recent rate cut. She particularly emphasized the potential risks of rising housing and healthcare service prices, as well as the possible impact of tariff policy changes on inflation.

However, the market does not seem to agree with this view. Currently, the market widely expects a 25 basis point rate cut in September, with some even betting on a substantial cut of 50 basis points. This expectation is primarily based on the latest employment data: non-farm payrolls increased by only 73,000 in July, far below expectations, and the unemployment rate also edged up to 4.2%.

But Hamak believes that the weakness in the labor market may just be a result of data correction. What she values more is that the wage growth rate remains above 4%, along with the resilience of a 0.5% month-on-month increase in consumer spending. These data suggest that the economic situation may not be as bad as it seems on the surface.

There are also divisions within the Fed. Some officials are concerned that the job market may deteriorate further and advocate for a rate cut as soon as possible; while others insist that a rate cut should not be considered until inflation is effectively controlled.

Harmak's tough stance may be aimed at cooling the market and preventing overly optimistic sentiment from leading to excessively loose financial conditions. At the same time, this may also be setting the tone for the upcoming Jackson Hole annual meeting, implying that the Fed will not change its current policy stance in the short term.

Ultimately, the Fed's decision is likely to depend on the inflation and employment data for August. These upcoming data will provide important references for the Fed, helping decision-makers weigh inflation risks against economic growth pressures. In any case, market participants need to be prepared for the persistence of a high interest rate environment.