Analysis: Powell has effectively caved, September rate cut a 'done deal'

By: theblockbeats.news|2025/08/24 05:12:14

BlockBeats News, August 24th, The Kobeissi Letter released its latest market analysis stating that Fed Chair Powell has effectively given in, with the Fed set to cut rates a month from now, blaming it on "weak labor market." Meanwhile, the PPI inflation rate has reached its highest level in 3 years, and the CPI inflation rate has remained above 2% for 53 consecutive months. At this time, not holding assets will lag behind the market.

To better understand what is happening, it is necessary to first understand the Fed's responsibilities: The Fed's purpose is to reduce unemployment and avoid inflation/deflation, which is the Fed's "dual mandate." Since 2021, the Fed has been highly attentive to inflation. However, Fed Chair Powell's Friday speech marked a significant shift: "A change in the balance of risks could require a readjustment of our policy stance." In other words, the Fed now sees the risk of unemployment as greater than inflation, almost confirming that a rate cut is imminent.

Federal Reserve Chairman Waller clearly stated at the ECB forum that the Fed will abandon forward guidance on interest rates, with future decisions relying entirely on real-time economic data. He noted that inflation risks in the U.S. have decreased over the past four weeks, but the ultimate impact ...

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