Core Viewpoint - The Federal Reserve's potential decision-making should no longer be viewed through the lens of preventive rate cuts, but rather as a race against a "slightly lagging" curve, with the possibility of a more significant rate cut and dovish signals than expected due to persistent weak employment and increasing political pressure [4][11]. Group 1: Political Shift vs Economic Shift - Fed Chair Powell has undergone a significant political shift, moving from confidence in the labor market to concerns about its slowdown, influenced by political dynamics rather than purely economic data [5][11]. - The political cost of maintaining "price stability" is rising, leading to expectations of a more aggressive rate cut in September [4][18]. Group 2: Employment Data and Its Implications - The recent downward revisions in employment data, including a significant adjustment of 91,100 jobs, provide Powell with a strong data-driven rationale for a substantial rate cut [13][15]. - The credibility of the Bureau of Labor Statistics (BLS) is declining, with officials expressing concerns over the reliability of employment data, which may impact future monetary policy decisions [12][13]. Group 3: Rate Cut Consequences - A potential rate cut of 50 basis points in September and a total of 100 basis points by year-end are plausible, despite inflation concerns, as the political cost of maintaining current policies increases [18][20]. - The long-term implications of rate cuts could lead to "re-inflation" risks, complicating the fiscal landscape and potentially undermining the Fed's independence [19][20].