Recently, many people believe that the Federal Reserve will not cut interest rates in September. I would like to share my views.

If someone had said in the past that the Federal Reserve would cut rates under Trump's pressure, I would certainly disagree. Although the Federal Reserve is not completely independent, it must at least be responsible for the dollar—after all, the dollar is its liability, and maintaining currency stability is the core premise of the central bank's existence. Currently, apart from Japan, other major currencies are cutting rates, and the Eurozone has accumulated rate cuts of several hundred basis points, creating a 200 basis point interest rate differential with the dollar.

From a market perspective, as long as the CPI does not continue to rise and break through 3%, the real interest rate can remain at 1% to 2%, and this state has lasted for a long time. If we only look at market behavior, the Federal Reserve might indeed start cutting rates early, like the Eurozone, but we cannot ignore the impact of Trump's tariff policy and a package of stimulus measures. For example, the significant increase in fiscal deficit means that the tariff revenue alone is far from enough to cover interest payments, which account for about 20% of fiscal expenditure. This leads to the issue of increased tariffs without a slowdown in debt accumulation. Therefore, the market's enthusiasm has not shrunk due to positive real interest rates; instead, it has warmed up again under stimulus policies.

Now the market situation is basically clear: the United States has reached framework agreements with several major economies in the short term, at least allowing tariffs to temporarily decrease, which will also alleviate supply shocks; at the same time, the temporary tariff agreement with our country has also been renewed. Therefore, unless Trump causes some major disturbance before September, as long as the CPI in July and August remains relatively stable, in line with or even below market expectations, it will create a suitable political environment for a rate cut.

Currently, the market supports a rate cut, and the policy level also leaves room for it, which is consistent with my previous judgment. If Trump is not confused and wants to push for a quick rate cut from the Federal Reserve, the choice is actually in his own hands—he just needs to quickly implement agreements with major economies to reduce policy uncertainty. The Federal Reserve would not mind cutting rates and might even act beyond expectations.

In fact, after the release of the July CPI data, the expectation for a 25 basis point rate cut in September was basically locked in; and now, with the release of the September PPI data, the results far exceeded expectations, making the 25 basis point rate cut in September even more certain. #创作者任务台