Recently, U.S. Treasury Secretary Yellen made a thought-provoking statement, suggesting that if Trump thinks inflation is a problem, he might support interest rate hikes. However, this perspective seems disconnected from the current economic situation. In fact, if the Fed does not cut rates in September but instead raises them, global financial markets could face serious shocks, with multiple areas, including U.S. stocks, Crypto Assets, A-shares, and European stock markets, potentially under pressure, leading to severe Fluctuation.

Currently, the market generally anticipates that the likelihood of a 25 basis point rate cut in September exceeds 93%, while the probability of a 50 basis point cut is around 6%. From multiple perspectives, it is indeed necessary for the Fed to cut rates this month.

The non-farm employment data for August showed weakness, with the Producer Price Index ( PPI ) and Consumer Price Index ( CPI ) also conveying clear signals. These indicators collectively point to the need for the Fed to stabilize the job market and ease inflationary pressures through interest rate cuts. However, the magnitude of the rate cut needs to adhere to the "moderate" principle: a 25 basis point rate cut expectation has already been absorbed by the market, and a direct cut of 50 basis points might trigger concerns about the economic fundamentals, exacerbating panic sentiment.

This puts Fed Chairman Powell in a dilemma—cutting rates by 25 basis points may be seen as insufficient, while a 50 basis point cut could be viewed as an overreaction. Considering Powell's consistent inclination towards a moderate and centrist policy stance, although a 25 basis point rate cut may have limited positive effects on the real economy, it could at least align with market expectations, making it the likely final choice.

It is worth noting that the voting pattern of this Fed meeting may be quite complex. The new governor, Milan, will participate in the voting for the first time, and with the strong advocates for rate cuts, Waller and Bowman, the camp supporting a rate cut has already secured 3 votes. These 3 votes may even lean towards supporting a 50 basis point cut, which will undoubtedly add more variables to the final decision.

Overall, the Fed's interest rate decision in September will be a game of balancing market expectations with economic realities, and its outcome will have far-reaching effects on global financial markets.