Strong Signal of Fed Rate Cut! Trump vs. Fed Battle Heats Up with Latest Remarks from Fed Officials

Federal Reserve officials are intensively releasing dovish signals. On August 29 Eastern Time, Mary Daly, President of the Federal Reserve Bank of San Francisco, hinted that Fed policymakers will soon cut interest rates. This statement further boosted expectations for a Fed rate cut. According to CME Group's "FedWatch Tool," the market is currently pricing in an 86.9% probability of a 25-basis-point rate cut in September.

At a critical moment, the "battle" between U.S. President Trump and the Fed is heating up. On August 29 Eastern Time, a hearing was held in a Washington D.C. district court regarding Fed Governor Cook's lawsuit against Trump over her dismissal. Lawyers for the plaintiff Cook and the defendant Trump argued in court over whether the reasons for Trump's dismissal were "justified."

On August 29 Eastern Time, Mary Daly, President of the Federal Reserve Bank of San Francisco, stated that Fed policymakers will soon be ready to lower interest rates, adding that inflationary pressures triggered by tariff policies may only be temporary.

Daly wrote in a brief social media post shared by the San Francisco Fed that day: "The time is nearing to recalibrate policy to better match the economy. Tariff-driven price increases will be one-time. It will take time to fully confirm this, but we cannot wait for perfect certainty, otherwise we risk damaging the labor market."

Daly noted that Congress has given the Fed two mandates: full employment and price stability. Currently, there is tension between these two goals, as tariffs push inflation higher while the labor market shows signs of slowing.

It is worth mentioning that the outlook for Trump's tariff policies has suddenly encountered uncertainty. According to CCTV News, on August 29 local time, a U.S. appeals court ruled that most of Trump's global tariff policies were illegal. The court stated that these tariff measures could remain in effect until October 14 to allow the U.S. government to appeal to the Supreme Court.

That day, Trump criticized the appeals court ruling on social media, calling it "wrong" for demanding the removal of tariffs and emphasizing that the existing tariffs are still in effect. Trump claimed that if tariffs were removed, "it would be an absolute disaster for the United States."