The markets were waiting for a signal — they got a pause. Fed Chair Jerome Powell stated that the regulator has not yet made a decision on a rate cut in September. His words were clear and without hints:
“No decisions have been made for September.”
Expectations not met
At the press conference, Powell emphasized that the decision will depend on fresh data — on inflation and the labor market. These will come in the coming weeks. But investors were hoping for more.
The markets reacted instantly. Indexes sharply dropped into the red — immediately after it became clear: there will be no quick easing of monetary policy. There is just over a month until the next meeting, and now the fate of the September decision depends on two statistical blocks — prices and employment.
Discipline broken for the first time in 30 years
Although the rate remained unchanged, the meeting was historic. For the first time in 259 meetings, more than one committee member opposed the general decision.
Michelle Bowman and Christopher Waller did not support keeping the rate unchanged. This is a signal: tension is growing within the Fed. Both were appointed during the Trump era. Bowman worked in the banking sector and regulation in Kansas, Waller came from academia and worked for a long time at the St. Louis Fed.
Their dissent highlights that views on the current economy within the committee are diverging more and more. Powell, however, insists: the current rate does not hinder growth.
“The economy does not look like restrictive policy is stifling it excessively,” he noted.
On the Fed’s radar — not just inflation
For the first time, Powell emphasized not only inflation but also the labor market. He warned of the risks of its cooling in the coming months. This factor will now also play an important role in decision-making.
In addition, Powell touched on the topic of tariffs. According to him, the increase in duties has already begun to affect the prices of certain goods. But so far, the impact on overall inflation and activity remains unclear. This may be a temporary effect, or it may be a persistent factor in price growth.
Growth is slowing, but not critically
Powell acknowledged a slowdown in growth rates in the first half of the year. The culprit — a decline in consumer spending. However, he urged not to jump to conclusions, citing fluctuations in exports and imports, which distort quarterly data.
The Fed, he said, remains flexible. Policy remains in a zone where it can quickly respond to changes.
What this means for the markets
One fact is obvious: the rate in September may remain unchanged. This increases uncertainty. The markets will closely watch macro data — especially CPI and Non-farm payrolls.
But the main thing is Powell’s rhetoric. He does not rule out a cut. He just is not rushing. This is not a hawkish position, but not a dovish one either. This is a wait-and-see strategy.
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