Markets are heating up: the likelihood of a Federal Reserve rate cut in September is rising sharply. And it’s not just about economic data — the spotlight is now on Fed Chair Jerome Powell, who is facing growing speculation about a potential dismissal or even resignation.
🔥 Political Tensions Mount Around the Fed
At the center of the storm are reports that President Donald Trump is allegedly considering removing Powell from his post. Although Trump has publicly denied these claims, tensions behind the scenes are escalating. Meanwhile, insiders suggest that Powell himself is considering stepping down, largely due to criticism surrounding the $2.5 billion renovation project of the Fed’s headquarters.
Adding to the controversy, FHFA Chairman William Pulte is calling on Congress to launch an investigation into Powell for allegedly misleading statements regarding the costly project.
📉 Over 56% Chance of Rate Cut in September
According to the CME FedWatch tool, traders are increasingly betting that the Fed will lower interest rates during its September FOMC meeting. The probability of rates falling to the 400–425 basis point range now stands at a notable 56.1% — a significant jump in expectations.
Conversely, the likelihood of the Fed keeping rates steady at 425–450 bps has dropped to 40.4%. A deeper cut to 375–400 bps remains highly unlikely, with odds at just 1.5%.
This shift in market sentiment coincides with growing doubts over Powell’s future. Though his term officially ends in May 2026, a Supreme Court ruling previously stated that the Fed chair can only be removed for “cause,” such as proven misconduct.
🏦 July Meeting: Markets Expect No Change
Despite growing anticipation for September, the upcoming July Fed meeting is expected to remain uneventful. The odds of a rate cut in July are just 2.6%, while traders overwhelmingly expect the Fed to hold rates steady (97.4% probability).
The Fed is also monitoring new inflation risks fueled by Trump’s escalating trade tensions — the president recently sent updated tariff letters to several countries. The U.S. CPI rose 2.7%, exceeding the 2.6% target and raising fresh concerns over inflation. However, the PPI came in cooler than expected, supporting the case for future rate cuts.
Still, strong labor market data has weighed on chances for a July cut. With just 13 days left until the next FOMC meeting, investors — including those in crypto — are now setting their sights firmly on September.
#Powell , #Fed , #FederalReserve , #CryptoMarket , #Inflation
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