Group 1: Current Economic Situation - The U.S. economy has shown resilience amid significant macro policy changes, with the labor market nearing full employment and inflation rates having significantly decreased from post-pandemic peaks [1] - The Federal Reserve's dual mandate is being challenged by rising inflation and employment risks, with the federal funds rate maintained between 5.25% and 5.5% for over a year [2][3] - The GDP growth rate has slowed to 1.2% in the first half of the year, reflecting a decrease in consumer spending and potential long-term impacts on economic growth and productivity due to changes in tax, spending, and regulatory policies [3][4] Group 2: Labor Market Dynamics - Recent employment reports indicate a slowdown in job growth, with an average of 35,000 non-farm jobs added monthly over the past three months, significantly lower than the 168,000 jobs added in 2024 [3] - The unemployment rate has slightly increased to 4.2%, but remains stable, indicating a balance in the labor market despite a decrease in labor supply due to immigration policy changes [3][4] - The labor market appears to be in a precarious balance, with both supply and demand declining, raising concerns about potential job losses and increased unemployment if downward risks materialize [3] Group 3: Inflation and Price Pressures - Tariff policy adjustments have led to price increases for certain goods, with overall personal consumption expenditures (PCE) rising by 2.6% and core PCE by 2.9% over the past year [4] - The impact of tariff adjustments on prices is expected to accumulate in the coming months, raising concerns about the potential for sustained inflation [4][5] - The Federal Reserve is cautious about the possibility of a wage-price spiral, although current labor market conditions do not suggest immediate risks of significant wage increases [4][5] Group 4: Monetary Policy Framework - The revised monetary policy framework aims to adapt to complex economic environments while maintaining the dual mandate of achieving full employment and price stability [7][11] - The Federal Reserve has shifted from an "average inflation targeting" approach back to a "flexible inflation targeting" strategy, emphasizing the importance of stable inflation expectations [12][15] - The revised framework reflects lessons learned from recent economic conditions, including the need for proactive measures when employment and inflation targets conflict [13][14]

Group 1 - The core viewpoint of the article is that Powell's speech at the Jackson Hole conference indicates a shift towards a more dovish monetary policy stance, balancing the risks of stagflation with a focus on employment and inflation [2][3][9] - Powell's analysis highlights a "fragile balance" in the labor market, with both supply and demand weakening, leading to an increased risk of unemployment [3][11] - Inflation is influenced by tariffs, which Powell describes as having a clear but potentially "one-time" effect, necessitating close monitoring of their transmission and accumulation [3][17][18] Group 2 - The long-term monetary policy framework has been revised to return to a 2% inflation target and a broader maximum employment goal, moving away from the average inflation targeting introduced in 2020 [4][22][25] - The 2025 statement serves as a retrospective confirmation of the Fed's monetary policy strategy, acknowledging the current challenges of stagflation and the need to balance dual objectives of inflation and employment [4][25][30] - The Fed's interest rate cut expectations have risen significantly, with the implied probability of a September rate cut increasing from 72% to 94%, and the number of expected cuts for the year rising from 1.9 to 2.2 [5][31][42] Group 3 - The article discusses the potential risks associated with the Fed's rate cut expectations, particularly focusing on the labor market's performance and upcoming economic data releases [5][42][43] - The baseline scenario anticipates an increase in the unemployment rate to the range of 4.4-4.5%, which would support the case for two rate cuts within the year [5][43][48] - The long-term outlook for 2026 suggests that the market may be overly optimistic regarding the number of expected rate cuts, with a need to monitor the upward pressure on long-term Treasury yields and the risk of a reversal in the dollar's value [5][53][70]

Group 1: Macroeconomic and Monetary Policy Stance - The policy tone has shifted to a "neutral dovish" stance compared to the July FOMC meeting, indicating a fragile balance in the labor market with rising risks of job losses [3][9][11] - Economic growth is slowing, with a real GDP growth rate of 1.2% in the first half of 2025, which is half of the 2024 rate, primarily due to a slowdown in consumer spending [10][11] - Inflation is influenced by tariffs, which are clearly visible but may be "one-time" effects, necessitating close monitoring of their transmission and accumulation [3][17][18] Group 2: Long-term Monetary Policy Framework Normalization - The long-term monetary policy framework has been revised to return to a 2% inflation target and a broad maximum employment goal, moving away from the average inflation targeting introduced in 2020 [4][22][25] - The 2025 statement serves as a retrospective confirmation of the Fed's monetary policy strategy, emphasizing the need to balance inflation and employment amid the current "stagflation" challenges [4][25][78] Group 3: Expectations and Risks of Fed Rate Cuts - The expectation for a rate cut in September has increased significantly, with implied probabilities rising from 72% to 94%, and the number of expected cuts for the year increasing from 1.9 to 2.2 [5][31][42] - The key to whether the September rate cut materializes lies not in Powell's statements but in the upcoming non-farm payroll report and inflation data [5][42][43] - The macroeconomic scenario for 2026 suggests persistent inflation and economic stabilization, but the pricing of three rate cuts may be overly optimistic, warranting caution regarding long-term bond yields and the dollar's reversal risk [5][53][60]