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Analysis: Powell has effectively capitulated, rate cut in September a certainty
Summary: In a recent market analysis, The Kobeissi Letter suggests that Federal Reserve Chairman Powell has effectively capitulated, with a rate cut expected in a month, blaming it on weak labor market. Meanwhile, PPI inflation rate has reached the highest level in 3 years, with CPI inflation rate staying above 2% for 53 consecutive months. To ...
In a recent market analysis, The Kobeissi Letter suggests that Federal Reserve Chairman Powell has effectively capitulated, with a rate cut expected in a month, blaming it on weak labor market. Meanwhile, PPI inflation rate has reached the highest level in 3 years, with CPI inflation rate staying above 2% for 53 consecutive months.
To better understand the situation, it is important to first grasp the Fed's responsibilities: the Fed's goal is to reduce unemployment and avoid inflation/deflation, which is its dual mandate. Since 2021, the Fed has been closely monitoring inflation. However, Fed Chairman Powell's speech on Friday marked a significant shift: changes in risk balance may require us to adjust our policy stance. In other words, the Fed now sees greater risk in unemployment than inflation, almost confirming an imminent rate cut.
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Link: Analysis: Powell has effectively capitulated, rate cut in September a certainty [Copy]
