Fed Holds Rates, Signals Possible September Cuts

Federal Reserve Chair Jerome Powell has indicated that the Fed could start cutting interest rates as soon as September if inflation continues to decrease and the job market remains stable. The Federal Open Market Committee (FOMC) held the benchmark rate steady at 5.25%-5.50%, but Powell mentioned that a rate cut is 'on the table' given further progress towards the Fed’s 2% inflation target. Odds for a 50 basis point cut in September rose significantly following Powell's comments, while the probability of a smaller 25 basis point cut remains high. The market reacted positively to Powell's statements, with stocks pushing higher. Analysts expect potential rate cuts not only in September but possibly also in November and December, which could provide relief to consumers and businesses dealing with high borrowing costs. However, Powell emphasized that no final decisions have been made yet, and future moves will depend on upcoming economic data.