"Double Act" of Interest Rate Cuts: Trump Exerts Pressure Publicly, Federal Reserve Calmly "Extinguishes"

On July 28, former U.S. President Donald Trump publicly called out: "I believe the Federal Reserve must cut interest rates this week." This statement sparked speculation in the market that the Federal Reserve might shift to a more accommodative policy at its meeting this week (July 30-31).
However, just 24 hours later, the well-known journalist Nick Timiraos, referred to as the "mouthpiece" of the Federal Reserve, published an article in an authoritative media outlet to cool things down. The report clearly pointed out that Federal Reserve officials are not yet ready to cut interest rates this week, and there are still internal disagreements on the timing of rate cuts, emphasizing the need for more economic data to support their decisions, aiming to "douse cold water" on the market's overly optimistic expectations for rate cuts.
This "drama" staged within just one day is filled with dramatic tension: on one side, the former president seeking political influence shouts "interest rates must be cut"; on the other side, the Federal Reserve, emphasizing policy independence, calmly responds "the time is not right." The stark contrast in their positions creates a rather ironic financial "double act." The market's short-term sentiment is thus repeatedly tugged, vividly reflecting the high complexity and uncertainty of the current macro policy environment.
Comprehensive assessment of current signals:
The interest rate cut window in September is becoming clearer: The possibility of an immediate rate cut at this week's meeting has significantly decreased. The Federal Reserve is likely to keep interest rates unchanged, and its policy statement along with Chairman Powell's press conference will be the focus, potentially continuing the tone of "dovish stance but cautious action." The market generally views September as a more likely point to initiate a rate cut.
Short-term fluctuations, mid-term data outlook: Investors need to recognize that short-term market sentiment is easily affected by such news. However, the core determining factors of the mid-term interest rate path remain the persistent downward trend of key economic data, especially inflation (PCE/CPI), and substantial cooling signals from the labor market. The Federal Reserve's "data-dependent" approach will not change.
Summary:
Trump's remarks and the Federal Reserve's rapid "clarification" highlight the tension between political demands and the independence of monetary policy. For the market, while the results of this week's meeting are unlikely to exceed expectations, the details of the communication will influence expectations regarding the pace of interest rate cuts. Investors should look beyond short-term noise and focus on the evolution of core economic indicators such as inflation and employment to make rational judgments that guide mid-term investment strategies. #美联储利率决议#