Rate Cut Hopes Fade: Fed Stays Cool as Markets Eye December Pivot

​Looks like Wall Street's wishful thinking just got iced. The Federal Reserve is in no hurry to cut rates—and after Chair Jerome Powell’s latest comments, the odds of a September rate cut are melting faster than a popsicle in Phoenix.

📉 September Cut? Don’t Hold Your Breath
Right after the July 29–30 FOMC meeting, the probability of a September rate cut tumbled to 40%, according to the CME FedWatch tool. That’s the fifth straight meeting where the Fed left its benchmark rate unchanged.

Powell made it clear:

“We’re well positioned to learn more... before adjusting our policy stance.”
Translation? No urgency—they’re waiting for more economic clarity.

🏦 Traders Betting on December Instead
Powell didn’t shut the door on rate cuts entirely, but the message was clear: the Fed wants to see real data before making any moves. Futures traders now think December is more likely for a rate adjustment.

John Velis of BNY put it bluntly:

“By December, they’ll have to cut... The economy will have weakened by then.”

⚡ Trump vs Powell: The Heat Is On
Enter Trump, never one to mince words. On Truth Social, he called Powell:

“TOO LATE, TOO STUPID & TOO POLITICAL… a TOTAL LOSER.”
The slam came just a week after a seemingly friendly meeting between the two at the Fed’s construction site.

Ironically, Powell described the encounter as “pleasant.” The drama writes itself.

📊 Markets React: From Sell-Off to Soft Rebound
Markets sold off briefly following the Fed’s hesitation but bounced back Thursday thanks to strong tech earnings. Whether that rally sticks will depend on how inflation and jobs data shake out in coming weeks.

🔎 Inflation Creeping Up
The PCE index—the Fed’s favorite inflation metric—hit 2.6% in June, the highest since February. Even more telling? Core inflation (excluding food and energy) rose to 2.8%.

This keeps the Fed on edge, especially with Trump’s tariffs potentially heating prices even more.

📆 What’s Next: All Eyes on Jackson Hole
The Fed won’t meet again until Sept. 16–17, but Powell will likely drop hints at Jackson Hole in August, the Fed’s annual summer retreat. Think of it as the Coachella of central banking.

Sue Hill from Federated Hermes thinks a cut is inevitable:

“I can’t see us staying here forever. Something will happen to bring them down.”

🧠 Final Word: Waiting Game, With Tariffs in the Mix
The Fed’s message is clear: uncertainty is the new normal. Between inflation, Trump’s trade blitz, and an unpredictable global economy, Powell & Co. are choosing patience over panic.

But come December? The gloves might come off.

​So don’t blink—this slow-burn story is far from over.