Although the market's expectations for a rate cut in September have decreased, I emphasized twice today that I am not worried at all about the market re-adjusting its rate cut expectations after what old Powell said. Looking at it this way, the 25 basis points in September is a bottom line!

Let me explain why I am not worried at all about the question of not lowering interest rates in September!

The reason is simple:
Real interest rates are too high. The nominal interest rate is between 4.25% and 4.50%, while inflation has dropped to around 2.7%, meaning that the real interest rate exceeds 1.5%. Such a high real interest rate will only continue to suppress investment and consumption, raise unemployment rates, and the labor market will become even worse.

Inflation is not driven by demand. The current inflation is more caused by the supply side (tariffs, geopolitical friction), not because Americans are spending too much. Using high interest rates to suppress demand is like using the wrong medicine.

Market expectations are already anchored. Financial markets generally expect a rate cut in September. If the Federal Reserve unexpectedly does not lower rates, it would be like flipping the table:

No rate cut → Asset sell-off → Market tightening credit on its own → Real economy worsens → Panic further intensifies.

At that point, a negative feedback loop would form, and even if there is a rate cut in October, it wouldn't be able to save the situation. $BTC $ETH