Federal Reserve (FED) Chairman Powell announced in its latest interest rate decision that the target range for the federal funds rate will remain unchanged between 4.25% and 4.50%.
The core logic behind the Federal Reserve's decision to maintain interest rates:
1. Tariff risks suppressing the rate cut window: Current tariff policies lead to an unclear inflation path, and the Federal Reserve needs to wait for the lagging effects of tariffs to manifest in 6-7 months before reassessing.
2. Wait-and-see strategy under conflicting data: The job market is cooling but not in recession, and core PCE is still above the 2% target, so the policy balance has not yet tilted towards easing.
3. Political pressure delaying rate cuts: Trump's frequent calls for rate cuts actually undermine their rationale, and the Federal Reserve needs to maintain its independence to avoid its policy being interpreted as a political tool.
Market expectations: September may become a key juncture, if inflation remains under control after tariffs are implemented and the unemployment rate exceeds 4.5%, a rate cut may be initiated. In the short term, an unexpected rate cut could trigger a correction in U.S. stocks, as valuations have already priced in easing expectations.