Fed Chair Jerome Powell addressed speculation about a September rate cut during the recent FOMC meeting, resulting in a reduction of the odds for such a cut from 58% to 39%. Despite Powell's firm stance against easing, there were notable dissenting opinions from Governors Waller and Bowman, which marked the first occurrence of dissent in 30 years. Waller suggested preemptive cuts due to perceived risks in the labor market and a belief that tariff-induced inflation would be temporary. Recent core PCE data indicates rising inflation, particularly due to tariffs affecting goods prices, contrasting with the previous trend of deflationary goods. The situation presents challenges for the Fed as it weighs political pressure to cut rates against rising inflation concerns. Powell's comments suggest a willingness to consider tariff-related inflation as a factor in decision-making. The upcoming jobs report could prove pivotal in determining the trajectory of rate cuts moving forward.

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