Fed's megaphone: Market focus shifts to whether there will be a second rate cut this year, aggressive easing is still hindered by inflation.

On August 24, Nick Timiraos, a prominent journalist for The Wall Street Journal known as the "Fed's mouthpiece," published a new article titled "Powell's Rate Cut Signal Reflects the Delicate Economic Situation," indicating that Fed Chairman Powell is cautiously paving the way for a rate cut next month but is sending a subtle message to those expecting aggressive easing—not to count on drastic actions. The market has largely priced in a rate cut in September, with the focus shifting to whether the Fed will consider another cut at its last two meetings of the year (October and December). Powell's cautious tone reflects the complex economic dynamics facing the Fed: describing the labor market as showing "peculiar" signs of weakness despite a low unemployment rate, while tariff-driven price increases are beginning to impact the economy. Powell has largely adopted the rate-cut argument made by Fed Governor Waller, who opposed Powell's decision to keep rates unchanged last month and supported a rate cut; subsequently, significant revisions to employment data confirmed concerns about labor market weakness. Powell is awaiting data to validate this view—this may be a necessary step to persuade skeptical colleagues. Some Fed governors believe the case for a rate cut is weak due to high inflation and exaggerated risks in the labor market. Powell's speech clearly indicates that he is still pursuing the long-sought soft landing, but the complexities that need to be addressed have significantly increased. The question is whether his new strategy can achieve a smooth economic landing without stalling or veering off course.