David Kelly, chief global strategist at Morgan Asset Management, said that the Federal Reserve should keep interest rates unchanged, and it is expected that inflation will gradually decline as more evidence shows that a continuous wage-price spiral will not form. “They should definitely stay on hold, and I actually think they will do the same,” Kelly said in an interview after the release of the US Consumer Price Index for July on Wednesday. The report shows that the underlying inflation performance of the US in July was moderate, and US Treasury bonds continued to rise after the data was released. Kelly pointed out that the three forces are working together to push inflation down markedly: tariff costs will fall on a year-on-year basis; market optimism about the end of the war in Iran is driving oil prices down; and wage growth continues to lag behind inflation. He added that this last point means that price pressure lacks the momentum needed to strengthen itself, and also reduces the possibility of forcing the Federal Reserve to raise interest rates. He said, “The US is now basically 'Teflon inflation'; it can't hold on.” There is no need to try to speed up this process, he said; “It's like an injury; you can only recover slowly. If you try to speed things up, you'll mess things up.” He also said, “If wages do not respond, it is impossible to form a wage-price spiral.”

David Kelly, chief global strategist at Morgan Asset Management, said that the Federal Reserve should keep interest rates unchanged, and it is expected that inflation will gradually decline as more evidence shows that a continuous wage-price spiral will not form. “They should definitely stay on hold, and I actually think they will do the same,” Kelly said in an interview after the release of the US Consumer Price Index for July on Wednesday. The report shows that the underlying inflation performance of the US in July was moderate, and US Treasury bonds continued to rise after the data was released. Kelly pointed out that the three forces are working together to push inflation down markedly: tariff costs will fall on a year-on-year basis; market optimism about the end of the war in Iran is driving oil prices down; and wage growth continues to lag behind inflation. He added that this last point means that price pressure lacks the momentum needed to strengthen itself, and also reduces the possibility of forcing the Federal Reserve to raise interest rates. He said, “The US is now basically 'Teflon inflation'; it can't hold on.” There is no need to try to speed up this process, he said; “It's like an injury; you can only recover slowly. If you try to speed things up, you'll mess things up.” He also said, “If wages do not respond, it is impossible to form a wage-price spiral.”