Seems that September will be the first cut. I think it’s too long, they should do it at the July meeting. Powell has his head stuck up his ass though, he keeps saying tariffs might increase inflation. He’s not supposed to predict what may happen. Delaying cuts is a big risk, we should get 2 cuts this year but Powell has been a problem.
Inflation is part of the Fed's mandate.
Cutting rates ahead of a massive inflation shock could be a big error.
Tariff won't be an inflationary one-off, but rather another spiral.
The problem with tariffs is that what should be a one-off event that creates a shock but then the market adjusts, it's something that becomes a permanent uncertainty because the tariffs are constantly changed and used as a negotiating tactic, so the market never adjusts and then they are just stuck trying to guess what's next, this increased risk makes people less prone to invest and thus stay in defensive positions. But the paradox is that at the same time, at some point the public stops reacting to these news because they no longer believe Trump will stick to them and will fumble if the market crashes a lot anyway, so they frontrun it.
They have been more than economic tools, they have been involved in political games and this has made them unpredictable. Investors can hardly risk such things when policies keep on rotating like that. And I too would say that waiting till September may be taking it too long. It is easy to understand the caution by the Fed, however being excessively slow is as disastrous as being too quick. The market is already psycheing itself up as to what Powell can or cannot do and that is enough in itself to screw up.