Analyst: Fed's Future Rate Cuts Pose a Significant Communication Challenge

On July 31st, Tom Graff, the Chief Investment Officer of Facet Company, stated that the Federal Reserve is clearly in a rather delicate situation. Logically speaking, they had anticipated that the new tariffs would bring a certain level of inflation. Ideally, the Fed would prefer to wait until inflation reaches its peak before considering a rate cut. Nevertheless, the pressure is constantly building. Even if the White House is not applying external pressure, the recent weakness in the labor market is sufficient to cause concern for the Fed. In fact, this is likely the reason why Bullard and Bowman voted against maintaining the existing interest rate and advocated for a rate cut at this meeting. I believe that this decision has laid the groundwork for the Fed to initiate rate cuts at the September meeting and may implement 1 to 2 more rate cuts this year. The challenge lies in the fact that despite the potential for rising prices, the Fed still needs to cut rates. This will pose extremely challenging communication difficulties. Trump's continuous pressure on interest rates further exacerbates these communication difficulties. At that time, Powell may be regarded by the outside world as giving in to Trump's demands. However, if job growth continues to weaken, the possibility of an economic recession will continue to increase. At that time, Powell will also be unable to turn a blind eye to it. (FX678)