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They’re looking for three straight 25bp cuts in Sep, Nov, Dec, and then two more next year to bring rates down to 3–3.25%.
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The weak July jobs report, especially the nasty downward revisions, probably already pushed Fed leadership towards cutting.
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Expect Powell will shift from ‘we can wait and see’ (July FOMC) to ‘we’re ready to manage risks on both sides.’
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Powell likely to underline that the labor market is softening and that tariffs are just a one-off price hit, not sticky inflation.
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He won’t directly say ‘we’re cutting in September,’ but he’ll make it pretty clear he’s leaning that way.
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Expect a walk-back of some 2020 changes
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Dovish tilt: If he sounds even more alarmed about jobs or hints that cuts are coming soon.
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Hawkish tilt: If he balances risks evenly or points to still-loose financial conditions as a reason not to rush.
This article was written by Arno V Venter at investinglive.com.