Recently, discussions about whether the Fed will cut interest rates in September have been heating up. Let's analyze this issue from different perspectives.

The Fed, as the helmsman of monetary policy, has the primary task of maintaining the stability of the US dollar. However, the current global economic situation is changing. With the exception of Japan, most major economies have begun a rate-cutting cycle, and the eurozone has even cumulatively cut rates by several hundred basis points, widening the interest rate differential with the US dollar to 200 basis points.

From a market perspective, as long as the inflation rate (CPI) remains below 3% and the real interest rate stays between 1% and 2%, the Fed could have followed the Eurozone in cutting interest rates early. However, the tariff policies and fiscal stimulus measures of the Trump administration, such as significantly increasing the deficit, complicated the situation. Although tariff revenues increased, they were still insufficient to offset interest expenses, leading to a continuous rise in debt. These policies somewhat countered the cooling effect brought about by the rise in real interest rates.

However, the latest economic situation seems to create favorable conditions for interest rate cuts. The United States has reached framework agreements with several major economies, and tariffs are expected to be reduced, which will alleviate supply-side pressure. At the same time, the temporary tariff agreement with China has also been extended. If Trump does not create new policy fluctuations before September, and the CPI data for July and August meets or falls below market expectations, then the political environment for interest rate cuts will already be in place.

Currently, the market generally supports interest rate cuts, and the policy level has also reserved space for this. If Trump can quickly implement agreements with major economies to reduce policy uncertainty, the Fed may take more proactive measures to lower interest rates.

The latest economic data further supports the possibility of interest rate cuts. After the release of the July CPI data, the expectation for a 25 basis point cut in September has become quite clear. Moreover, the September PPI data exceeded expectations, making a 25 basis point cut in September almost a certainty.

In summary, although the Fed has always been cautious in its monetary policy, the current economic environment and policy direction seem to be paving the way for a rate cut in September. We will continue to monitor the developments and await the Fed's final decision.