Global central banks remain cautious amid mixed inflation data and AI-driven economic growth.

Huo Xing Finance reports that on July 31, the U.S. June PCE monthly rate unexpectedly turned negative, with core PCE rising just 0.1% month-over-month, and annualized GDP growth also below market expectations. While this appeared to provide evidence of cooling inflation and economic slowdown, a breakdown of GDP components reveals that private final demand, consumption, and AI-related corporate investments remain robust, indicating that economic momentum has not significantly deteriorated. This explains why markets did not broadly bet on easing following the weaker data; instead, focus shifted toward policy credibility and global funding costs. Particularly noteworthy is the apparent coordinated foreign exchange intervention by the Japanese government alongside U.S. authorities, alongside reports of dollar-selling interventions in South Korea. Although the Bank of Japan held rates steady, some policymakers advocated for rate hikes, while three members of the Bank of England also supported tightening. This demonstrates that central banks globally continue to adopt a cautious, even hawkish stance toward monetary policy amid inflation and exchange rate pressures. Consequently, global liquidity conditions have not fundamentally shifted due to a single month of lower U.S. inflation data; rather, financial conditions remain tight through various forms of intervention. Meanwhile, the technology sector’s fundamentals remain solid. Amazon Web Services revenue exceeded expectations, Oracle continues to expand its collaboration with Google, and OpenAI has again lowered model pricing—indicating that AI competition is increasingly shifting from model capability toward cost efficiency and enterprise adoption. In contrast, Apple’s weaker performance in China and its services segment reflects lingering divergence in end-user demand. This suggests the valuation gap between beneficiaries of AI infrastructure and end-user hardware manufacturers may further widen. Looking ahead, what markets truly need to monitor is not merely whether the U.S. will cut or raise rates, but whether major global central banks will collectively maintain a tight financial environment through interest rates, foreign exchange interventions, and policy communication. If expectations for future BoJ rate hikes continue to rise and Asian central banks persist in forex market interventions, global carry trade flows and U.S. dollar liquidity may continue to adjust. Meanwhile, AI investment and corporate earnings will remain key fundamentals supporting risk assets. The interplay between these two forces is expected to keep market volatility at relatively elevated levels throughout the third quarter.