Nick Timiraos:
Well, I would say that Chair Powell today gave the old Heisman stiff-arm. I was at the press conference. And a number of my colleagues, we all tried to lay whatever traps we could to try to goad him and to giving any kind of clue about what it would take to cut interest rates at the Fed’s next meeting, which, as you noted, is in September, and he just did not go for it.
So they will have two more months of jobs reports, two more months of inflation data. I think what you would need to see to get a rate cut in September would be some weakness, some meaningful weakness potentially in the labor market. And so if you’re cheering for rate cuts here, it’s a little bit of a story to be careful what you wish for, because the sorts of things that may get the Fed to move would be weaker labor market data.
Now, I should note, the Fed could also cut interest rates if the labor market is fine, and inflation comes in mild. Everybody’s been bracing for a little bit higher inflation, and if it turns out that those tariffs are not getting passed along to the consumer, then the Fed might judge, OK, maybe we have seen enough. They have been on hold for six months now.
And so after two more months, they may decide, look, we’re not seeing the price pressures. It’s being absorbed in the supply chain somewhere else, and they don’t want to have a recession if the labor market slows in a sort of unexpected fashion.
