Is the Fed's rate cut imminent in September? Understand the key signals of the FOMC policy shift in one article.

The Fed (Federal Reserve) is the central banking system of the United States, composed of the Federal Reserve Board in Washington, D.C., and 12 regional Federal Reserve Banks located across the country. Its core functions include formulating monetary policy, regulating Financial Institutions, maintaining financial stability, and providing payment system services. Currently, the market focus has shifted to whether it will initiate a new round of interest rate cuts in September.

##Today's Data: The Last Piece of the Policy Puzzle?

The key economic indicators released today (August 14) have become the core barometer for the interest rate cut path:

• Producer Price Index (PPI): July month-on-month expected value 0.2%, core PPI is also expected to grow by 0.2%.
• Unemployment benefits data: The number of initial unemployment claims for the week is expected to be 225,000, slightly lower than the previous value of 226,000; the number of continuing unemployment claims is expected to decrease to 1.96 million.

This data follows the release of the July CPI (year-on-year 2.7%) and core CPI (year-on-year 3.1%). Although inflation is still above the Fed's 2% target, structural signs of weakness have already emerged.

##The Probability of Interest Rate Cuts in September Rises: The Consensus Game Between Wall Street and the White House

Many top institutions have recently adjusted their expectations, and a rate cut in September has become the mainstream judgment:

• Nomura Securities: Clearly predicts a 25 basis point rate cut in September, followed by another 25 basis points in December and March next year, totaling a 75 basis point cut.
• Dominion Securities: More aggressive expectations for three interest rate cuts this year, and three more next year, ultimately bringing the rate down to 3%.
• CITIC Securities: Similarly, it is judged that there will be "three consecutive interest rate cuts within the year, each by 25 basis points."

And U.S. Treasury Secretary Scott Bessent's call is particularly radical, as he openly advocates for a direct rate cut of 50 basis points in September and states that the entire easing cycle should see a reduction of 150 - 175 basis points. This position is far beyond the moderate statements of most Fed officials.

##Reasons for Interest Rate Cuts: Triple Drivers of Employment, Debt, and Political Pressure

1. The labor market has significantly cooled: Non-farm employment in July increased by only 73,000, far below the expected 110,000. More critically, the data for May and June was substantially revised down by nearly 260,000, with a revision rate as high as 90%. The unemployment rate rose to 4.2%, reaching a recent high.

2. Government debt pressure has surged: in the fiscal year 2025, the interest expenditure on U.S. debt accounts for 30% of fiscal revenue. Lowering interest rates can alleviate the financing costs for the Treasury and mitigate the risk of "technical default."

3. Political Pressure Becomes Public: Trump continues to criticize the Fed's policies, even threatening to sue Chairman Powell; Treasury Secretary Mnuchin breaks with tradition by publicly calling for interest rate cuts, showing that the game between the White House and the Fed has intensified.

##Challenges to the Independence of the Fed: The Complex Background of Policy Shift

Despite increasing political pressure, Fed officials are still trying to defend the independence of their decision-making. Chicago Fed President Austan Goolsbee recently emphasized, "Partisan political interests do not always align with the best economic interests... The Federal Reserve Act gives the Fed a dual mandate, not to please the president."

At the same time, tariff policy has become a new variable. Goolsbee pointed out that tariffs simultaneously drive up inflation and suppress the economy, putting the Fed in a policy dilemma. Powell previously stated that the impact of tariffs on inflation "has not yet fully manifested," suggesting a wait-and-see attitude.

Personnel changes also add uncertainty. The current chairman Powell's term will end in May 2026, and the Trump administration has listed 10-11 potential successors. Treasury Secretary Basent proposed the concept of a "shadow Fed chairman" to involve successors in policy communication in advance, thereby weakening Powell's influence.

##Impact on the Cryptocurrency Market: A Liquidity Turning Point Approaches

If the Fed starts cutting interest rates, it may trigger a triple effect:

• Increased dollar liquidity: Lower interest rates reduce the attractiveness of dollar assets, and funds may shift towards alternative investments.
• Risk appetite rebounds: As a high-volatility asset, cryptocurrencies typically benefit from easing cycles.
• Hedging demand adjustment: Gold and Bitcoin may simultaneously receive capital inflows.

##Conclusion: Layout Window Before Policy Shift

Comprehensive economic data, political games, and debt pressure make it highly probable that the Fed will cut interest rates at the FOMC meeting on September 16-17. Although a 25 basis point cut is the mainstream expectation, if today's PPI and employment data are weaker than expected, a more aggressive move of 50 basis points cannot be ruled out. For investors in the crypto space, a turning point in interest rates usually accompanies an increase in market volatility, so it is advisable to closely monitor the forward signals from the Fed's Jackson Hole annual meeting at the end of August—TD Securities expects Powell to "lay out a path of easing" there.