Fed Chair's Dovish Turn Sparks Debate on September Rate Cut Size

Federal Reserve Chair Jerome Powell has signaled that interest rate cuts are imminent, likely starting in September. While he didn’t specify the size or path of these cuts, his remarks at the Jackson Hole symposium emphasized progress on inflation and a focus on labor market health. This announcement has led to lower Treasury yields and a weaker dollar, while boosting stocks. Traders are now debating the magnitude of the first cut and the subsequent easing path, with some betting on a half-point reduction in September. However, recent geopolitical tensions in the Middle East may complicate market reactions when trading resumes.