Core Viewpoint - The Federal Reserve is expected to initiate a rate cut during its monetary policy meeting on September 16-17, amid political tensions and recent changes in its board members [1][2][3]. Group 1: Federal Reserve Meeting - The Federal Reserve's monetary policy meeting is scheduled for September 16-17, with widespread expectations of a 25 basis point rate cut [1]. - The appointment of Stephen Milan as a new Federal Reserve Board member is anticipated to influence the upcoming meeting, as he may advocate for a larger rate cut [2][3]. Group 2: Political Influence - President Trump has been pressuring the Federal Reserve to lower interest rates, suggesting that the cut should be more significant than the anticipated 25 basis points [4]. - The recent court ruling allows Lisa Cook to remain on the Federal Reserve Board during the meeting, countering Trump's attempt to dismiss her [1]. Group 3: Economic Context - The U.S. unemployment rate rose to 4.3% in August, the highest in nearly four years, which has intensified market expectations for a rate cut [4].

Core Viewpoint - The Federal Reserve decided to maintain the federal funds rate target range at 4.25% to 4.50%, marking the fifth consecutive time since early 2025 that rates have been held steady, despite increasing pressure from the White House for rate cuts [1][3]. Group 1: Federal Reserve's Decision - The Federal Reserve noted a slowdown in U.S. economic growth in the first half of the year, which could provide a basis for future rate cuts if the trend continues [3]. - The Fed emphasized high uncertainty in the economic outlook, with risks to both inflation and employment targets [3]. - Two Fed governors voted against the decision to maintain rates, indicating deepening internal divisions regarding monetary policy [1][7]. Group 2: Economic Indicators and Influences - Fed Chairman Jerome Powell stated that the current monetary policy stance allows the Fed to respond promptly to potential economic developments, with future adjustments depending on comprehensive evidence, including employment, inflation, and economic activity data [3][5]. - Powell highlighted that tariffs have raised prices on certain goods, suggesting that 30% to 40% of core inflation may be influenced by tariffs, which could be a key factor in delaying rate cuts [5]. Group 3: Political Pressure and Internal Disagreements - President Trump has publicly pressured the Fed for significant rate cuts, even threatening to dismiss Powell, which reflects a tense relationship between the Fed and the White House [6][11]. - The dissenting votes from the two governors, both appointed by Trump, align with concerns over a weakening labor market and the potential for increased recession risks if rates are not lowered [7][11]. Group 4: Market Reactions and Future Expectations - Following the Fed's decision, market expectations for a rate cut in September significantly decreased, with the probability of a 25 basis point cut dropping from 68% to 45% [12]. - Despite the drop in rate cut expectations, the U.S. stock market showed resilience, with mixed performance among major indices, indicating that investor sentiment remains cautious yet stable [14].