BlockBeats News, August 12th. As the US July CPI is about to be released, the Federal Reserve's internal vigilance on inflation has escalated further. Boston Fed President Collins explicitly stated that if future data indicate the need for further policy tightening, she would support a rate hike in September; previously, officials such as Harker, Logan, and Kashkari have also stated their support for a more restrictive policy. This means that the expected 2.5% year-on-year increase and 0.2% month-on-month increase in core CPI for July are not just inflation data but a direct validation of whether the September policy space can be maintained.

Currently, economists' mainstream expectations are that the annual increase in core CPI will decrease from 2.6% to 2.5% and the monthly increase will rise from the previous 0% to 0.2%. If the data meets expectations, it indicates that inflation is still gradually cooling down, but it is still significantly below the Fed's 2% target; if the monthly or annual increase is higher than expected, it may further strengthen the Fed's internal concerns about "inflation staying high for too long." Especially in the recent significant slowdown in the labor market, the Fed faces not a simple choice of raising or lowering rates, but how to prevent inflation from solidifying again while avoiding further deterioration of the labor market.

Energy prices are making this task even more difficult. The EIA expects that supply disruptions may continue until the end of 2026; meanwhile, the risk of Red Sea shipping is still present, and Ukraine's attack on Russia's Black Sea energy transportation facilities has also affected CPC crude oil exports. This means that energy supply risks are no longer concentrated in a single region but exist simultaneously in major energy transit nodes such as the Middle East, the Red Sea, and the Black Sea. If the supply constraints persist, energy prices will not only directly push up fuel costs but may also form a second-round inflationary pressure through transport, manufacturing, and consumption prices.

This is also the most challenging part for the Fed at the moment: the labor market has shown signs of cooling down, but inflation remains above target, and there are new upward risks in energy supply. Collins even pointed out that low- and middle-income families have clearly felt the squeeze of energy prices on the cost of living, indicating that if energy prices continue to rise, it will increase both consumer pressure and the Fed's need to maintain a tightening policy.

For the financial markets, this further amplifies the significance of CPI. If core inflation meets the mainstream expectations of 2.5% and 0.2%, the Fed can still maintain a wait-and-see stance, but the high-interest rate environment will not be quickly unwound; if the data exceeds expectations, the probability of a rate hike in September and US bond yields may be concurrently repriced, while energy supply risks may further slow down the speed of inflation decline. Crypto ETFs saw a net inflow of about $245 million in the past week, about $1.677 billion in the past month, but still a net outflow of about $6.898 billion in the past quarter, indicating that funds have not completely exited the crypto market but are still in a state of short-term fund replenishment and medium-term capital contraction. Therefore, what will truly affect overvalued and highly volatile assets next is not just whether CPI is lower than expected but whether inflation can continue to decline and whether the energy supply shock will make this downward path steeper once again.