🎙️ Powell Speaks: A Test of Fed Independence, Is a Rate Cut Coming in September?
#US Federal Reserve (#Fed ) Chair Jerome Powell will take the stage at the "Capital Framework for Large Banks" conference in Washington today at 12:30 UTC. However, this speech carries far more significance than just a typical central bank announcement.
🔍 Markets Hold Their Breath: Fed Chair to Speak
Powell's remarks are critical not only in terms of monetary policy, but also in terms of political pressure, individual independence, and the final opportunity to provide direction before the upcoming FOMC meeting. Recent escalating criticism of Trump, the interest rate debate, and the Fed's spending on public spending have put Powell in the firing line in both the economic and political arenas.
🇺🇸 Increasing Pressure from Trump and Republicans
Former President Donald Trump and many Republican politicians are calling for Powell's resignation. The rationale: High interest rates have caused the housing and credit markets to contract, inflation to become persistent, and the Fed's resistance to structural reforms. Trump frequently targets Powell, claiming that Fed policies are "weakening the public."
Yesterday, another round of criticism was added to these criticisms. US Treasury Secretary Scott Bessent made the following harsh remarks in a broadcast:
"The Fed members have been unable to break free from their limited mindset. Their actions and inactions must be questioned."
This statement constitutes a direct challenge not only to Powell but also to the Fed's institutional independence.
📉 Will a Rate Cut Come?
It's almost certain that interest rates will remain unchanged at the FOMC meeting on July 30th. However, all eyes are on September. Powell's "dovish" signals regarding the September meeting could be a significant guide for the markets.
However, Bank of America (BofA) made a striking prediction in a report released yesterday:
“We do not expect any interest rate cuts from the Fed through 2025.”
This is in stark contrast to market prices. A rate cut of at least 25 basis points began to be priced in in September.
🏛️ Millions Spent on Fed Buildings a Topic of Controversy
The renovation costs of the Fed's Washington headquarters have also recently sparked intense debate. Republicans dealt another blow to Powell, saying, “It is unacceptable for the Fed to spend millions while the economy is being tightened.”
While this issue isn't directly related to monetary policy, it could damage the public's perception of the Fed. Such details can remain on the political agenda for a long time, especially as an election year approaches.
🔮 What Are the Expectations?
📌 Expectations from Powell:
No signal will be delivered for a September interest rate cut
Emphasis on preserving the Fed's independence
Indirect, if not direct, responses to pressure from Trump and politicians
Macro analysis and reassuring statements on the economy and banking system
🧩 Conclusion: Powell's Speech Could Be a Turning Point
Today's Powell speech isn't just a lecture; it's a critical milestone in the Fed's changing trajectory, its political independence, and the President's personal perspective.
As Trump's pressure mounts, Powell's remarks will shape not only the markets but also politics. If Powell leaves the door open for a rate cut, it signals a new rally, both for his own proposal and for cryptocurrencies.
However, with a more cautious and hawkish stance, we can achieve the path we envision in the market.
