September rate-cut odds plunged after the Fed held rates at 4.25%4.50% and Jerome Powell declined to give any signal on a cut, even as President Trump launched a blistering attack calling him too late, too angry, too stupid, & too political.
Powell stressed the Fed has made no decisions about September and kept the tone cautious, pointing to still-elevated inflation and the need for more data, which undercut market confidence and sent futures traders sharply lowering odds of a September cut.
Markets trimmed the probability from roughly 65% a day earlier to about 46% per the CME FedWatch tool, and hotter-than-expected core PCE inflation readings pushed some models nearer to just 39%, reinforcing the view that rate relief isn’t imminent.
Trump reignited his feud with Powell on Truth Social, accusing him of costing the country trillions, attacking the Fed’s independence and blasting recent policy in a post that labeled Powell too late and too political, underscoring the growing political noise around monetary policy even as the central bank tries to emphasize data dependence.
Why it matters: The sharp pullback in cut expectations highlights growing investor uncertainty and leaves positioning vulnerable if inflation stays sticky or if the Fed leans even more data-dependent.
Investors will be watching the September 1617 FOMC meeting and incoming inflation prints for clues on whether the narrative shifts again.
This article first appeared on GuruFocus.