Select Language

Fed: September rate cut in doubt as data uncertainty persists - Commerzbank

Breaking news

Fed: September rate cut in doubt as data uncertainty persists - Commerzbank

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
update 2025.08.01 18:54
Fed: September rate cut in doubt as data uncertainty persists - Commerzbank

update 2025.08.01 18:54

The Fed may or may not actually cut interest rates in September. The decisive factor will be how the hard macroeconomic data (i.e., inflation and the labor market) looks by then. That's why all eyes are likely to be on the US labor market report for July today. Certainly, there are signs of weakness in some areas of the US labor market, particularly in cyclical sectors such as manufacturing and business services. Despite a respectable figure at first glance (+147,000), the June report was mixed on closer inspection. However, there is no sign of a slump, Commerzbank's FX analyst Antje Praefcke notes.

Fed dissenters spark concerns over politicization

"According to Powell, the labor market is largely in balance, although downside risks are apparent. A moderately restrictive monetary policy is appropriate given the solid labor market and inflation above target. It also remains to be seen how the tariffs will affect inflation. So if the data does not point in the right direction, the interest rate cut in September could be in jeopardy. Although the market has already scaled back its expectations following Wednesday's Fed meeting, it would probably have to make further adjustments if future macro data continues to erode the case for a cut. In this case, the dollar could even gain a little more ground in the short term."

"In the medium term, the behavior of the two dissenting members of the Board of Governors (Bowman, Waller) could play a role, as could the extent to which it could influence the Fed's monetary policy in general. Powell is clearly positioning himself strongly in favor of the independence of the Fed's interest rate decisions, despite the US president's insulting posts. In my view, however, the voting behavior of the two dissenters leaves a bad aftertaste, as it raises the suspicion that they are trying to push themselves up Trump's list of candidates to succeed Powell as 'doves willing to cut rates.'

"In the short term, a 'politicized stance' may be beneficial to personal ambitions. But I doubt that it is conducive to one's reputation as an independent central banker. And it is also questionable whether the possible chairmanship of one of the two dissenters on the Board would inevitably lead to a more dovish Fed. After all, the remaining governors could become dissenters in the future - Bowman and Waller have already crossed the threshold themselves - and vote against cuts, precisely in order to reinforce the Fed's independence. A kind of 'internal power struggle' within the Board could arise. A more politicized Fed and internal power struggles would initially be a negative factor for the dollar, since the markets like independent central banks."


Date

Created

 : 2025.08.01

Update

Last updated

 : 2025.08.01

Related articles


    Show more

    FXStreet

    Financial media

    arrow
    FXStreet

    FXStreet is a forex information website, delivering market analysis and news articles 24/7.
    It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
    Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

    Was this article helpful?

    We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
    We are also looking for writers with extensive experience in forex and crypto to join us.

    please contact us at [email protected].

    Thank you for your feedback.
    Thank you for your feedback.

    Most viewed

    EUR/USD surges above 1.17 as Powell hints at September Fed cut

    EUR/USD skyrockets during the North American session after Federal Reserve (Fed) Chairman Jerome Powell leaned dovish at his Jackson Hole speech, opening the door for a resumption of the easing cycle. The pair trades at 1.1718, up by 0.97%.
    New
    update2025.08.23 06:25

    Dow Jones Industrial Average hits record highs after dovish Powell appearance

    The Dow Jones Industrial Average (DJIA) soared to new all-time highs on Friday, testing above 45,700 for the first time since the index's inception.
    New
    update2025.08.23 03:45

    Gold climbs as Powell flags rising labor risks, dovish Fed tilt

    Gold prices continue to trend higher on Friday after the Federal Reserve (Fed) leaned dovish, as commented by the Fed Chair Jerome Powell, who said that "downside risks to the labor market are rising." XAU/USD trades at $3,371 after hitting a daily low of $3,321.
    New
    update2025.08.23 03:44

    USD/CHF tumbles as Powell's Jackson Hole remarks trigger US Dollar selloff

    The Swiss Franc (CHF) surges against the US Dollar (USD) on Friday after Federal Reserve (Fed) Chair Jerome Powell's remarks at the Jackson Hole Symposium triggered a broad-based Greenback selloff.
    New
    update2025.08.23 03:31

    NZD/USD rebounds from four-month low as Powell's Jackson Hole remarks sink US Dollar

    The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) on Friday, with NZD/USD rebounding from its lowest level since April 11 as traders reacted to Federal Reserve (Fed) Chair Jerome Powell's cautious remarks at the Jackson Hole Economic Symposium.
    update2025.08.23 00:37

    USD/CAD slides as Powell turns dovish, Canadian Retail Sales beat

    The USD/CAD tumbles over 0.49% during the North American session as the Fed Chair Jerome Powell leans dovish and strong Canadian Retail Sales, boosted the Loonie. At the time of writing, the pair trades at 1.3835 after hitting a daily high of 1.3924.
    update2025.08.23 00:21

    USD/JPY retreats from three-week high as Powell's remarks amplify September rate cut bets

    The Japanese Yen (JPY) advanced strongly against the US Dollar (USD) on Friday, with USD/JPY retreating from an intraday high of 148.78 to trade near 146.66, down almost 1% on the day.
    update2025.08.23 00:05

    EUR/USD jumps above 1.1700 on Powell's dovish words

    The US Dollar (USD) collapsed as Federal Reserve (Fed) Chair Jerome Powell delivered his speech at a Jackson Hole Symposium, with EUR/USD peaking at 1.1707, up roughly 100 pips in the last few minutes.
    update2025.08.22 23:47

    GBP/USD jumps past 1.3500 as Powell leans dovish

    The GBP/USD rallies as the Fed Chair Jerome Powell takes the stand at the Jackson Hole Symposium. At the time of writing, the pair trades above 1.3500 after Powell hints that the Fed might be ready to resume its easing cycle.
    update2025.08.22 23:46

    Silver extends rally as Powell's Jackson Hole remarks boost Fed cut bets

    Silver (XAG/USD) rallies sharply on Friday, rebounding from an intraday low of $37.70 to trade near $38.70, up around 1.40% on the day.
    update2025.08.22 23:40

    Disclaimer:arw

    All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

    The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

    • Facebook
    • Twitter
    • LINE

    Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

    I agree
    share
    Share
    Cancel