Fed Cautious After 25bp Cut; Global Central Banks React

After last week’s 25‑basis‑point cut, Federal Reserve Chair Jerome Powell said downside risks to employment have become central and reiterated a data‑dependent, non‑committal approach, warning against cutting too aggressively or keeping policy restrictive too long. Fed officials were split on next steps: Kansas City Fed President Jeffrey Schmid called the move appropriate as risk management but cautioned inflation remains too high and policy only modestly restrictive, Austan Goolsbee said he is uneasy about front‑loading cuts based solely on softer payrolls, and Governor Michelle Bowman said she is increasingly worried the labor market is fragile and urged readiness to act to support jobs. Fed projections still show core inflation above target and the median of policymakers expects quarter‑point cuts in October and December with only modest easing in 2025. Schmid’s remarks helped underpin dollar strength, and international central‑bank developments also moved markets: Bank of Japan minutes showed some members favoring eventual rate hikes, while Bank of England Governor Andrew Bailey warned further cuts would depend on inflation, knocking the pound about 0.7% versus the dollar.