Powell's Sudden Shift to Dovish Stance, Is Trump's Political Pressure Starting to Show?

Recently, the financial circle has been stirred up by a piece of news! According to Jin Shi Data reports, Guojin Macro Research pointed out that Powell's dovish shift at the Jackson Hole meeting was completely unexpected and starkly different from his statements at the July FOMC press conference, and his views on the labor market have made a 180-degree turn, now expressing concerns about job downside risks. This shift inevitably raises speculation: could it be that Trump's political pressure on the Federal Reserve is having an effect?

Trump has always hoped for a rate cut by the Federal Reserve and even planned to replace the Federal Reserve Chairman to push this goal forward. The Kobeissi Letter analysis suggests that Trump hopes for a 300 basis point rate cut by the Federal Reserve. Although it is expected to not be that aggressive, the intention behind it is already very clear. Global central banks initiated the largest rate cut wave of this century in May, with a total of 15 cuts, and the market expects the Federal Reserve to cut rates for the first time in a month. Trump has also stated that he will soon announce a new Federal Reserve Chair nominee and has urged them to cut rates.

Looking at Powell's speech at the Jackson Hole meeting, although the Federal Reserve still expects two rate cuts in 2025, the dovish signals he released have significantly increased the possibility of a 25 basis point rate cut in September and consecutive cuts within the year. However, a more accommodative monetary policy also has side effects; the dynamics of inflation in the U.S. may become harder to control in the future, and an accelerated economy post-rate cut may face a higher inflation center, potentially leading to a scenario of greater 'stagnation' this year and greater 'inflation' next year.

The game of direction for the Federal Reserve's monetary policy is backed by a complex economic situation and political pressure. Whether Trump's political calculations can come to fruition and how Powell's dovish stance will impact the U.S. economy remains to be seen! #BNB创新高 $ETH #以太坊生态山寨币普涨