The upcoming Jackson Hole annual meeting has attracted widespread attention. Fed Chairman Powell is not expected to disclose details of the September interest rate decision at this conference. Instead, his speech will focus on the Fed's assessment of its monetary policy framework, which occurs every five years.

Recent economic data shows that the U.S. July CPI growth has moderated, and the labor market is showing signs of slowing down. These factors have strengthened market expectations that the Fed may cut interest rates in September. According to data from the Atlanta Fed, the market expects a 62.9% probability of a 25 basis point rate cut in September, with even a 22.5% chance that it could be a 50 basis point cut.

However, some analysts are taking a conservative stance on this. They believe that Powell may use this speech to lower the market's overly optimistic expectations for interest rate cuts. Some hawkish officials within the Fed, such as Chicago Fed President Goolsbee and Atlanta Fed President Bostic, have publicly stated that a deeper understanding of the impact of tariffs on inflation is needed before deciding on interest rate cuts.

Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, pointed out that the current focus should be on whether Fed officials will contradict market expectations. She expects that Fed officials who do not support a rate cut in September will also openly express their opinions. If they believe the market's judgment is incorrect, they will speak out proactively, as guiding market expectations back to rationality is part of their responsibilities.

Currently, the Fed is facing a policy dilemma. On one hand, the producer price index (PPI) has risen more than expected due to tariff measures, suggesting that input inflation risks are accumulating; on the other hand, signs of slowing economic growth cannot be ignored. In this complex economic environment, the Fed's policy choices will be more cautious.