For much of 2025, analysts and investors supported Jerome Powell and the Federal Open Market Committee (FOMC) stance. Looking at the same economic data as the Fed, they have come to the conclusion so far No time to cut.
Until now – or more specifically, until Friday.
Late last week, the Bureau of Labor Statistics’ blockbuster jobs report put the Fed’s dual mandate (2% inflation and highest employment) on a sharp focus. The labor market performed worse than before, with 258,000 jobs out of earlier estimates and 4.2% increase in unemployment.
Two members of the FOMC do not object Keep interest rates at the current level of 4.25% to 4.5%Now more and more regional bank presidents are proposing to change the tune.
Minneapolis Fed President Neel Kashkari is often seen as a hawk member of the Fed Yesterday’s interview said Now it may be time to cut time: “I focus on two categories of data: I know a lot of data, and I am confident about it, and there are data I don’t know, we won’t know for a while.
“I think the data we know is that the economy is slowing…it means it might be appropriate to start adjusting federal funds rates in the near term.”
San Francisco Fed Chairman Mary Daly echoed him, who was in Prepared remarks: “My own assessment is that the risks of our employment and inflation targets are roughly balanced. Inflation, lack of tariffs, has been gradually declining, economic slowdowns and ongoing restrictive monetary policy, should continue to do so. Tariffs may promote inflation in the near future, but may not require a unified approach to bias policy.
“At the same time, the labor market has been alleviated. I think the additional slowdown is undesirable, especially because we know that once the labor market stumbles, it tends to be quick and difficult. This means we may need to adjust our policies in the coming months.”
Meanwhile, Federal Reserve Governor Lisa Cook Tell the Federal Reserve The work report on the activity “related” was “related” and added that “there are some typical turning points for these revisions.”
More importantly, among the dissidents at the July meeting, neither Kashkari nor Daly nor Cook appeared. With Gov. Chris Waller and FOMC member Michelle Bowman already lobbied for layoffs, the ranks of those in the minority stage are growing every day.
“In the transfer rhetoric, the pricing of the price cut in September has increased by 90% to 95% from changing rhetoric,” Deutsche Bank’s Jim Reid told clients on Thursday morning.
Although the 2-year Treasury bonds collide slightly in the news, the yield is still as high as 4.24% in the long run, and 30 years Up to 4.8%.
according to FedWatch Tools From the derivatives platform CME Group93.4% of the market expects base interest rates to drop to 4% to 4.25% in September, a one-click to current interest rates. Only 6.6% of investors expect further holdings.
Goldman Sachs does have a potential opposite to this seemingly foregone conclusion. U.S. chief economist Jan Hatzius wrote earlier this week that his phone was a 25-point drop in succession of three-pointers in September, October and December (and subsequently cut two more 25bp in 2026H1), but warned: “If the upcoming report shows that the upcoming report shows a higher price than expected, it may be delayed.
“But if the unemployment rate rises again in the August employment report or the initial unemployment claim increases with its still low levels. Even after the front-end rally on Friday, our funds tax rate remains below market pricing, especially on the basis of probability power.”
Probably two
If the Fed knows about his “blockbuster” work report in real time, Professor Jeremy Siegel believes that the Fed will not only cut this month, but can also click twice.
The Fed may even be tempted to lower 50bps, a professor of finance at the University of Pennsylvania Wharton wrote in a column for Wisdomtree, a senior economist.
Professor Siegel said: “My point is that President Powell’s press conference last week was that Powell was too hawkish, even before we knew Friday’s data.” Write. “I expect to lower the first 25 basis points at the FOMC meeting on September 18, followed by the same migration in November and December, lowering the Fed funding rate to 3.58%.
“A slower pace, “firm but flexible glide route,” keeps the committee’s eagle on board while acknowledging that real activity is cooling; first, the actual GDP is only averaged at an annual rate of 1.2%, while forward indicators such as ongoing claims are higher.”
Like many other economists, Professor Siegel is looking for a Jackson Hall workshop later this year to suggest a roughly one of monetary policy.
But even then, Professor Siegel (with some other prominent economists) still believes that Fed Chairman Jerome Powell should resign before his term.
Siegel Noted last month. “But in today’s politically fraught environment, if Powell remains in place and the economy is in turmoil in the second half of the year, then that independence could be at a greater threat… If growth slows down and Powell’s positive progress towards the cuts is not positive enough, Powell will be a scapegoat.
“In this case, a Republican-led Congress that is already skeptical of the central bank could impose serious structural restrictions, including changes to the authority to change the Fed’s administration or the president’s power to step down as president. We must remember: The Fed is a biological congressional. It has no constitutional status and can rewrite its rules.”
