Overview

• Fed Chair Jerome Powell signaled a shift toward addressing downside risks to employment while stressing that decisions will rest solely on incoming data.
• Major banks flipped forecasts after the speech, with Morgan Stanley joining Goldman Sachs, JPMorgan, Barclays, Deutsche Bank and BNP Paribas in expecting a September cut; BofA remains a holdout.
• Traders now assign roughly 80%–87% odds to a 25‑bp reduction at the Sept. 16–17 meeting, according to LSEG and CME FedWatch, with larger moves seen as contingent on sizable payroll declines.
• Powell flagged tariff effects and tighter immigration policy as potential inflation risks, which, alongside forthcoming PCE, CPI and the August jobs report, could still alter the timing or size of any easing.
• Institutional tensions persist, with July dissents for cuts from Governors Michelle Bowman and Christopher Waller and fresh political pressure after President Trump claimed to fire Governor Lisa Cook, a move Cook says is unauthorized.