U.S.-Iran Military Tensions Intensify as Expectations of a Hawkish Fed Shift Rise
FastBull FeaturedSummary:
Trump again threatened to strike Iran; Waugh: The Fed will act without hesitation to address inflation......
【Highlights】
1. U.S. forces continue the maritime blockade of Iran, forcing 20 commercial vessels to reroute
2. Trump again threatens to strike Iran and seeks to impose additional tariffs on Iranian imports
3. Fed holds rates steady for the fifth consecutive meeting, with three officials favoring a rate hike
4. Waugh: The Fed will act without hesitation to address inflation
5. Republicans begin considering another debt-limit increase as midterm elections approach
【Details】
U.S. forces continue the maritime blockade of Iran, forcing 20 commercial vessels to reroute
U.S. Central Command said in a statement on the 29th local time that U.S. forces were continuing to enforce a maritime blockade of Iran. As of that day, U.S. forces had redirected the routes of 20 commercial vessels and rendered two vessels inoperable. U.S. forces had also conducted boarding inspections of two vessels to ensure compliance with the blockade requirements. The move indicates that U.S. military pressure in the Gulf remains elevated, with tensions surrounding the Strait of Hormuz and related shipping routes showing no signs of easing.
Trump again threatens to strike Iran and seeks to impose additional tariffs on Iranian imports
On July 29 local time, U.S. President Donald Trump said the United States would deliver a heavy blow to Iran in response to its missile attacks on U.S. forces in the Middle East. He also said the administration planned to add provisions to relevant legislation authorizing the United States to impose tariffs on Iran.
Speaking to reporters at the White House, Trump said it was now America's turn to retaliate. Iran knew that the strike was inevitable and had asked the United States not to attack, but Washington would “teach them a lesson.” Trump said Iran had launched five missiles the previous night, all of which were intercepted and shot down. As for whether an agreement could ultimately be reached, Trump said he would wait and see, but emphasized that the United States would certainly deliver a heavy blow to Iran.
Fed holds rates steady for the fifth consecutive meeting, with three officials favoring a rate hike
The Federal Open Market Committee (FOMC) approved the following statement by a vote of 9-3. To support the Federal Reserve's dual mandate, the Committee decided to maintain the target range for the federal funds rate at 3.5%-3.75%. The Committee will continue implementing its policy of maintaining ample reserves in the banking system.
Despite elevated uncertainty stemming from the conflict in the Middle East and other factors, U.S. economic activity continued to expand at a solid pace. Productivity growth and capital investment remained strong. Employment gains remained broadly in line with the expansion of the labor force, while the unemployment rate changed little.
Inflation remained elevated relative to the Committee's 2% target, partly because supply shocks had pushed up prices in some sectors, including energy. The Committee said it remained committed to achieving price stability.
The statement was broadly unchanged from June. The members who dissented from the decision were Hammack, Kashkari, and Logan, all of whom favored raising the target range for the federal funds rate by 25 basis points at this meeting.
Waugh: The Fed will act without hesitation to address inflation
After the Federal Reserve announced its decision to leave interest rates unchanged, three voting members favored a rate hike. At a post-meeting press conference, Chair Waugh said the Federal Reserve would act without hesitation to address inflation.
Waugh said that although the Fed would not disclose the direction of future interest-rate policy, it would take the necessary steps to achieve its 2% inflation target. He emphasized that when inflation rises, policymakers tend to tighten monetary policy, and if inflation remains elevated, interest rates could be one of the tools used to address it.
Waugh said the June core CPI data had not had a significant impact on the FOMC's July decision. The Fed will monitor inflation data over the coming period, through the next FOMC policy meeting. During this period, the Fed will have a series of important decisions to make and will meet with its inflation working group over the coming weeks. In his view, this is a period for careful consideration. He added that although the Fed decided not to adjust interest rates today, “this is the beginning of the story, not the end.” He also said there had been no political interference from the Trump administration during the policy meeting.
Republicans begin considering another debt-limit increase as midterm elections approach
According to Politico, Republicans raised the U.S. debt ceiling by $5 trillion last year. They are now considering how to avoid another fiscal cliff during Trump's presidency. An independent forecasting organization expects the United States to reach “X-date”—the final deadline for avoiding a sovereign debt default—sometime between next summer and early 2028, a period that could coincide with the intensification of the presidential primary season.
Two people familiar with the matter said White House officials had privately proposed raising the U.S. debt ceiling as part of a partisan spending package that many Republicans hope to pass before the November midterm elections, in an effort to avoid high-stakes negotiations with Democrats.
If Republicans lose control of either chamber of Congress in the upcoming midterm elections, the move could spare Trump considerable political headaches. Democrats would otherwise demand concessions in bipartisan negotiations to prevent an unprecedented U.S. sovereign debt default. The total U.S. national debt currently stands at nearly $39.7 trillion.
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