Will Powell cut interest rates this time? The answer lies in his statement tomorrow!
Although it seems almost impossible for the Federal Reserve to cut rates at the July meeting based on current data, what Powell says is key; a single statement from him could completely reverse market sentiment. The Federal Reserve is currently divided, with two officials publicly opposing Powell's hardline inflation strategy, instead supporting the view promoted by Trump that rates should be cut quickly.
However, Powell himself is also conflicted: cutting rates too early risks a resurgence of inflation, which could take the market one or two years to recover from; cutting rates too late, while less risky, might drag the economy into increasing weakness.
So, Powell now leans towards a strategy of caution. Even if rates are not cut this time, if economic data significantly worsens over the next few months, the Federal Reserve could very well suddenly increase the rate cut on September 17 from the originally expected 25 basis points to potentially 50 or even 75 basis points.
The FOMC meeting tomorrow morning is definitely a key point; this meeting could directly determine the overall trend of the market for the coming weeks. All investors are now focused on Powell's words, waiting for him to make a decisive statement!
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