The Fed's recent rate cut decision has sparked widespread discussion in the market. The rate cut is considered "reactive" rather than forward-looking. Powell admitted that if the Fed had seen the employment data for the month before the July meeting, it might have made the decision to cut rates earlier. Data released two days after the July meeting showed that the US unemployment rate climbed to 4.3%, which raised market concerns that the Fed may have waited too long to act.

Analysts point out that the Fed must rely on a strong forward-looking framework rather than passively relying on economic data. But unfortunately, the Fed's policy decisions have not met this standard so far. Another challenge facing Powell is that Wall Street's expectations for future rate cuts far exceed the forecasts of Fed policymakers. According to the latest market analysis, policymakers expect the Fed to cut interest rates twice more by 25 basis points each before the end of 2024, and another four times in 2025.

Inside the Fed, members of the rate-setting committee disagree on the path of rate cuts for the rest of the year. Seven policymakers supported another 25 basis point cut by the end of the year, while nine members supported an additional 50 basis point cut. Meanwhile, two policymakers did not expect any more rate cuts this year. This shows that there are significant differences of opinion within the Fed, especially on the pace and intensity of responding to the current economic situation.

Nevertheless, in order to prevent the job market from deteriorating further, some policymakers may support a larger rate cut this month. The current interest rate path shows that some Fed officials may prefer to cut interest rates by 50 basis points rather than 25 basis points to increase support for the economy and reduce pressure on the job market. This also reflects that the Fed has to seek greater balance and compromise in its decision-making in the face of economic slowdown and inflationary pressures.

This policy uncertainty not only keeps financial markets highly nervous, but also exacerbates doubts about whether the Fed can effectively guide the US economy to avoid recession. As more economic data is released in the coming months, the challenges facing Powell and his team will undoubtedly become more complicated. They need to find the right policy intensity and timing between economic slowdown and maintaining employment.