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Recently, Federal Reserve Chairman Powell made a striking statement, suggesting that the Fed may consider a 25 basis point rate cut at the upcoming September meeting. Powell noted that the ongoing changes in current economic risks provide greater justification for a rate cut decision, and this statement seems to place him in the "dovish" camp of the Federal Open Market Committee.
Powell acknowledged that the government's trade policies have had a significant impact on consumer prices. However, he believes this impact may only be short-term and insufficient to become a long-term focus for the central bank. This view reflects the complex situation the Fed faces in formulating monetary policy.
Regarding the current economic situation, Powell stated: "Given that the labor market does not show signs of particular tightness and faces increasing downside risks, the likelihood of a significant rise in inflation seems low." He further noted that the current economy is facing a challenging situation, where inflation has upward pressure while employment faces downside risks.
Powell's remarks have sparked market speculation about the Fed potentially adjusting its monetary policy. Analysts believe that this could be a precautionary measure taken by the Fed to address potential economic downside risks after weighing multiple factors such as economic growth, employment rate, and inflation rate.
With the September Fed meeting approaching, the market will closely watch the Fed's decision-making trends and the potential impact of this possible interest rate cut on the U.S. and even the global economy.