Overview

• Powell said shifting risks could justify adjusting policy, opening the path to easing as soon as next month.
• Futures tracked by CME FedWatch now assign roughly 75% odds to a quarter-point cut from the current 4.25%–4.50% range at the mid-September meeting.
• The debate reflects inflation still above target, with PCE at 2.6% year over year and core at 2.8%, alongside signs of labor-market cooling.
• Powell warned that the effects of tariffs on consumer prices are now clearly visible and pledged not to let a one-off price jump become persistent inflation.
• Political and institutional pressures are intensifying, with President Trump attacking Fed leadership and urging Governor Lisa Cook to resign, as two governors dissented in July in favor of a 25 bp cut.