BNP Paribas strategist Chi Lo stated that a potential Federal Reserve rate hike in September is unlikely to initiate a new tightening cycle comparable to 2022-2023. Instead, any increase would likely function as a "preventive rate hike" aimed at reversing last year's three cuts and restoring inflation to target levels, rather than launching an aggressive campaign. While further hikes may bolster the Fed's anti-inflation credibility, they cannot resolve external shocks such as war or energy price inflation. BNP Paribas warns that slowing economic activity through additional tightening carries the risk of pushing the economy into stagflation if supply-side pressures persist.