... the Fed chair is clearly more convinced by the employment side of that
equation, indicating that “adjustment” may be necessary — a big hint
that the central bank is poised to restart cuts in interest rates next
month.
This was itself a surprise to investors, who seemingly were expecting a
snoozefest. The dollar dropped sharply, government bonds jumped in price
and stocks picked up at the end of a rough week as markets baked in
those new expectations. A cut next month is now seen as a done deal,
with likely chops in the following two meetings too. ...
If employment data for August picks up from its summer lull, which we
will not know until the first week of September, then the Fed will be in
the awkward spot of cutting interest rates in to a decent jobs market
with inflation still running above target. “The Fed would risk a policy
error if it were to cut rates,” warned analysts at Bank of America. ...
The Fed is supported by structures that protect its independence, but
anyone who doubts Trump’s desire and willingness to bend it towards his
will is kidding themself ...
More.
Complete tosh.
The Fed is data dependent, and there are two inflation readings and one employment report intervening before the next rate decision.
Powell never even got close to saying the FOMC was poised to make a policy change. His remarks, as always, emphasize data and contextualize hypotheticals, that's all.
The press are scoundrels trying to bully the Fed like this. They are on Trump's level in Dante's Inferno.
Powell said conditions "may warrant adjusting our policy stance." That could include a rate hike as well as a rate cut. He said "risks to inflation are tilted to the upside" while "the labor market appears to be in balance" even after the huge downward revisions to total nonfarm employment which got the head of the BLS fired.
In fact, he said that the latest data for July core pce inflation, which won't be out until Friday, indicate 2.9% year over year, an uptick from June's 2.8%. That's not good news for the rate cut cheerleaders, and that's why no one is reporting it.
The FOMC is not going to cut the interest rate if that happens and employment remains steady.
August 29 and September 5 will tell us what is likely to happen on September 17, not The Financial Times. Fittingly, the ignoramus for The Financial Times ends her column with a preposition.
And don't forget core cpi inflation on September 11. Powell & Company will have all the very latest data for their decision, on which they will rely:
Monetary policy is not on a preset course. FOMC members will make these
decisions, based solely on their assessment of the data and its
implications for the economic outlook and the balance of risks. We will
never deviate from that approach.
