Rest assured, interest rates will still be cut in September. This PPI data is just an unimportant number that no one pays attention to; it is merely an opportunity for capital to drop under the guise of cleaning up high leverage.

As for Powell, even if he tries to use this as an argument, it won't change the outcome of the rate cuts. Because the composition of the Federal Reserve Committee has fundamentally changed this month compared to last month. First, one of the hawkish members resigned, allowing Trump to replace him with someone who will definitely support his views, and who will likely be the chair next year. Secondly, last month two committee members completely switched sides to support Trump, advocating for rate cuts. So now three members are definitively in favor of the cuts, while the remaining four, besides Powell, are still swing voters. This means Powell is becoming quite isolated within the committee.

This structural change is far more important than this insignificant data. Not to mention that the most critical non-farm payroll and CPI also indicate that rate cuts should happen.