New York, USA – Next week, the US Federal Reserve will hold a two-day political session to decide whether the interest rates lowers.
The meeting follows a month -long break in prices and is carried out in the middle of increased pressure on the central bank.
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US President Donald Trump recently dismissed the governor of the Federal Reserve, Lisa Cook, for allegations of mortgage fraud She fights in courtAnd has escalated his loud and repeated criticism of the Fed chairman Jerome Powell.
The Fed, which emphasizes its independence from the political influence, will weigh up new economic data if it takes into account its next step. The benchmark interest rate has been 4.25 percent – 4.50 percent since December.
So far the Fed kept tariffs stableAnd says that the attitude presents flexibility to react to economic shocks associated with the shift in trade policy. But many economists now believe that a reduction in installments is imminent.
They indicate signs of a cooling labor market and a tax -related pressure on inflation as factors that could support the reduction in rates and not the political pressure.
“I think the Fed has made quite clear that they will lower prices This will certainly expect this in September and the market, ”Daniel Hornung, Policy Fellow at the Stanford Institute of Economic Policy Research and former deputy director of the National Economic Council, told Al Jazera.
CME FEDWATCH, which pursues the likelihood of Fed’s policy movements, is the likelihood of a quarter percentage of 94.5 percent, which repeated the research of JPMorgan last month.
“For Fed Chairman Jerome Powell, risk management considerations can go beyond compensation for employment and inflation risks, and we now see that the path of the least resistance is to drive the next cut of 25 basis points to the September meeting,” said Michael Feroli, head of the US economist at JP Morgan at this point.
Prices jump
In August, consumer prices rose by 0.4 percent compared to the previous month, which increases the Ministry of Labor (CPI) the Ministry of Labor, published on Thursday.
The profit followed by 0.2 percent in July. Economists surveyed by Reuters had predicted a monthly increase in the core CPI by 0.3 percent.
Energy costs rose by 0.7 percent and were powered by 1.9 percent. Flight prices rose by 5.9 percent, clothing prices rose by 0.5 percent, protection rose 0.4 percent, food prices rose 0.6 percent and restaurant grinding times by 0.3 percent.
Some goods watched particularly strongly. Coffee prices rose by 3.6 percent per month when Brazil, the world’s leading coffee exporter, ran away the programs from the USA after new tariffs.
The producer price index (PPI), which pursues prices that receive companies for goods and services, recorded almost 7 percent and more than 33 percent last year.
There is a comparable phenomenon with beef for which the The United States is heavily dependent on Brazil. CPI data showed an increase of 2.7 percent, while the PPI measure a monthly increase of 6 percent and an annual increase of 21 percent.
Overall, the PPI slipped by 0.1 percent, which indicates that some companies absorb tariff costs instead of passing them on to consumers. Service prices decreased by 1.7 percent, which is due to a decline in margins by 3.9 percent for machine and vehicle wholesalers, which spends an increase in goods prices by 0.1 percent. This happened after wholesale inflation was revised to 0.7 percent in July, which was far above the forecasts of the economists.
Nevertheless, the companies will start to warn that they cannot continue to pay higher costs. In the past few weeks Campbells Co, What Campbell’s soup and goldfish cracker does and Procter & Gamble I said both plan to increase the prices for consumer goods in the coming months because the tariff pressure remains.
Labor market falls
The US labor market, a key factor for the interest decisions of the Federal Reserve, has cooled down.
Around 263,000 people submitted the first unemployment claims last week, most of them in four years, as the data Ministry published on Thursday published the ministry’s data.
On Tuesday, the Bureau of Labor Statistics has also revised the workplace profits in the past few months and between April 2024 and March 2025, when the US economy added 911,000 fewer jobs than had been reported before.
All of this is reproduced by Bad jobs pay last week. In August, the economy only added 22,000 jobs, whereby the profits were concentrated on the healthcare system (which added 31,000 jobs) and social assistance (which added 16,000). The unemployment rate rose to 4.3 percent, the Ministry of Labor reported.
Revisions showed that employment growth in July at 79,000 was somewhat stronger, compared to 73,000, while June was reduced by a modest profit to a loss of 13,000.
“The latest job figures were really problematic for the economy, in particular the revision of the previous figures,” said Michael Klein, professor of international economic matters at the Fletcher School at Tufts University, Al Jazeera.
The vacancies and sales also decreased and for the first time since April 2021 left more unemployed than available positions.
In a report by Challenger, Gray & Christmas, the burden was emphasized and stated that the job cuts increase between July and August. According to the ADP National Employment Report, in which only 54,000 jobs were added, private salary account growth also slowed down only 54,000 jobs compared to 106,000 in the previous month.
Competing forces
As a rule, high inflation causes higher interest rates that prevent borrowing and expenses and restrict prices.
“The FED is currently in a very difficult position because there is both a weak job market and a higher inflation. If the FED is exposed to a weaker job market, it would usually lower interest rates. If it is exposed to higher inflation, it would increase interest rates.
The labor market is already burdening consumer expenses. The buyers have made increasing layoffs and slower settings carefully, and the latest consumer confidence index shows plans to buy Big-Ticket and slide discretionary articles.
With Trumps changing tariffs and Hardline immigration policyCompanies are in a “waiting and lake” mode, which is increasingly uncertainty.
“We see immigration and customs policy that at the same time increase prices and slow down the growth of the labor market,” said Hornung.
