Jerome Powell's press conference on Friday August 22 was eagerly awaited, as he was expected to outline the FED's planned monetary policy path between now and the end of the year. It should be remembered that the federal funds rate has not fallen since December 2024, and that the US labor market is beginning to show signs of weakness. But the PCE inflation rate is moving closer to the 3% threshold than to 2%, and Jerome Powell has so far been uncompromising on the inflation target.
No FED pivot? Technical pivot? The Fed's real pivot?
These were the questions I posed in the article I published last Friday, prior to Powell's press conference in Jackson Hole.
During his speech in Jackson Hole, Jerome Powell highlighted the growing threats to US employment. He hinted that monetary easing could soon be on the cards, while stressing the uncertainty surrounding inflation due to tariffs.
So, can we finally decide between :
1) No FED pivot?
2) The FED's technical pivot (an isolated rate cut)
3) Real FED pivot (a series of rate cuts up to December 2025)
Yes, I think we can now rule out the scenario of no pivot by the end of the year. On the other hand, the question of whether the FED will pass a simple technical pivot or engage in a real pivot remains open.
Powell was careful to remain cautious. The effects of the tariffs on consumer prices are now visible and could fuel more persistent inflation. This uncertainty explains why the Fed has yet to commit to a clear path.
The Fed's choice for September 17, October 29 and December 10 will depend on the following factors:
- PCE inflation on Friday August 29
- The NFP report on Friday September 5
- The balance of power between the 12 voting members of the FOMC (I wrote an article on this subject last week)
Differences within the central bank further complicate the situation. Some officials see an urgent need to cut rates, given the weakness in job creation confirmed by the July report. Others are more cautious, fearing that premature rate cuts could boost inflation. A third trend proposes a gradual approach: a limited adjustment followed by a pause to assess the effects on the economy.
In any case, Powell seems to have restored the balance between employment and inflation, so if the September 5 NFP report is disappointing, a rate cut will be almost certain.
At this stage, according to the CME FED WATCH TOOL, the implied probability of a rate cut on September 17 is 85%.
DISCLAIMER:
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions.
This content is not intended to manipulate the market or encourage any specific financial behavior.
Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.
Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content.
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Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade.
Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties.
The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
No FED pivot? Technical pivot? The Fed's real pivot?
These were the questions I posed in the article I published last Friday, prior to Powell's press conference in Jackson Hole.
During his speech in Jackson Hole, Jerome Powell highlighted the growing threats to US employment. He hinted that monetary easing could soon be on the cards, while stressing the uncertainty surrounding inflation due to tariffs.
So, can we finally decide between :
1) No FED pivot?
2) The FED's technical pivot (an isolated rate cut)
3) Real FED pivot (a series of rate cuts up to December 2025)
Yes, I think we can now rule out the scenario of no pivot by the end of the year. On the other hand, the question of whether the FED will pass a simple technical pivot or engage in a real pivot remains open.
Powell was careful to remain cautious. The effects of the tariffs on consumer prices are now visible and could fuel more persistent inflation. This uncertainty explains why the Fed has yet to commit to a clear path.
The Fed's choice for September 17, October 29 and December 10 will depend on the following factors:
- PCE inflation on Friday August 29
- The NFP report on Friday September 5
- The balance of power between the 12 voting members of the FOMC (I wrote an article on this subject last week)
Differences within the central bank further complicate the situation. Some officials see an urgent need to cut rates, given the weakness in job creation confirmed by the July report. Others are more cautious, fearing that premature rate cuts could boost inflation. A third trend proposes a gradual approach: a limited adjustment followed by a pause to assess the effects on the economy.
In any case, Powell seems to have restored the balance between employment and inflation, so if the September 5 NFP report is disappointing, a rate cut will be almost certain.
At this stage, according to the CME FED WATCH TOOL, the implied probability of a rate cut on September 17 is 85%.
DISCLAIMER:
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions.
This content is not intended to manipulate the market or encourage any specific financial behavior.
Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.
Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content.
The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services.
Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA.
Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade.
Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties.
The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
This content is written by Vincent Ganne for Swissquote.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
This content is written by Vincent Ganne for Swissquote.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.