Fed Keeps Rates Steady, Markets Expect a Cut in September 

The Fed kept its policy rate steady at 4.50% during its July meeting. Following this decision, futures markets show that investors are pricing in a 68% probability of at least a 25-basis-point rate cut in September. This suggests that expectations for a rate cut are strengthening. 

Daly stated, “We can’t afford to waste more time figuring out whether inflation is persistent. We must shape our decisions based on the most likely scenario,” highlighting the need for a careful but not overly delayed approach to rate cuts. 

She reminded that two rate cuts are still on the table, adding, “Fewer rate cuts may also be possible. However, current data may point to the need for further cuts.” 

Assessing the labor market, Daly said there hasn’t been a critical weakening in employment. However, she noted that the ongoing softening trend could lead to undesirable outcomes if it deepens. 

The Fed official also said that it was reasonable to be patient with the decision made in July, but emphasized that “infinite patience” cannot be a policy strategy. Daly added that they have not seen any indication that tariffs are putting persistent pressure on inflation. 

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Bessent stated, “There are many strong candidates. We’ll see how things develop depending on the pace of the process.” Meanwhile, current Fed Chair Jerome Powell’s term is set to end in May 2026. However, Bessent emphasized that reappointing Powell at the end of his term could cause confusion in the markets. He also noted that the pace of the process would directly depend on Trump’s decisions. 

In financial circles, Powell’s potential reappointment has long been debated. In recent months, increasing political pressure and disagreements over monetary policy have further intensified these discussions. 

Trump Pressures Powell: Political Tension Grows 

U.S. President Donald Trump has been one of the voices accelerating the process, stating that Powell should leave office. Trump argued that the Fed’s failure to cut interest rates on time has harmed the U.S. economy. 

As political pressure mounts, uncertainty is also building in the financial markets. According to Polymarket data, names such as Kevin Warsh, Kevin Hassett, and Scott Bessent are emerging as leading candidates for the next Fed chair. 

All three are known figures in public discourse regarding economic policy. Bessent’s current position and influence in the markets place him at the top of the list. Despite Powell’s term lasting until 2026, the early search for a successor signals the White House’s intention to be more directly involved in monetary policy. 

Meanwhile, an official timeline for the process has not yet been released. However, sources indicate that the list of candidates will be narrowed down in the coming months. The race for the Fed chair is not only capturing the attention of financial circles but also directly impacting politics. Ultimately, the direction of U.S. monetary policy will play a critical role for markets ahead of the presidential election. 

As the selection process continues, investors will closely monitor every development. 

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FED Expectations 

In light of recent inflation and employment data, the markets had been receiving strong signals that the FED might hold rates steady at this meeting. These expectations were confirmed. The current rate was 4.50%, and the announced rate remained unchanged in line with forecasts. 

FED Chair Jerome Powell is set to hold a press conference following the decision. While reaffirming the commitment to combating inflation, Powell also provided significant signals regarding the upcoming period. According to the Fed’s calendar, the next FOMC meeting will be held on July 29-30. Following the decision, Bitcoin was trading at $104,400. Brent Crude hovered around $76.45 per barrel. 

Global Impact and Future Expectations 

The FED’s interest rate decision affects not just the US but the entire global economy. Additionally, today the Euro Area’s Annual Consumer Price Index (CPI) was announced at 1.9% (Forecast: 1.9%, Previous: 2.2%). While volatility increased in European and Asian markets following the decision, investors will closely follow upcoming economic data and guidance from FED officials. Market fluctuations may continue until the next FED meeting. In particular, inflation and unemployment data will become even more critical during this period. 

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