Zhongjin: Fed sets conditions for rate cut in September

On August 1st, Jinshi Data reported that the possibility of a rate cut in September was raised by Fed Chairman Powell, but it would require the conditions of continued slowing inflation and cooling labor market. We believe that the Fed has shown a certain inclination towards rate cuts, but officials still want to see more data supporting rate cuts before making a decision on the ‘left side’. This means that a rate cut in September may or may not happen. The possibility of not happening comes from the fact that the reasons for the rate cut are not sufficiently supported by the steady performance of the US economy. In summary, the current US economic indicators are weakening in some aspects and recovering in others, presenting a more mixed state. For the Fed, the best approach is to remain patient and take action after economic data meets the criteria for rate cuts.