Interest Rate Cuts Delayed — Fed Blames Tariff Inflation

In today's video, we're going to make a prediction about what's going to happen on July 30th. Okay, so on July 30th, the Federal Reserve will decide whether to cut interest rates or not. So according to the Federal Reserve's most recent projection, and they did this back in June, they predicted that they're going to cut interest rates two more times this year in 2025. And as you can see, there are four more meetings left this year. So what's going to happen? And of course, this is so important because if the Federal Reserve starts cutting interest rates, that's going to be inflationary. And this is also going to help the stock markets, Bitcoin, and precious metals. So let me walk you through this. So the Federal Reserve has two responsibilities. They call it their dual mandate. So their job is to ensure maximum employment and price stability. So in plain English, that just means that they're going to set their policies to ensure that our labor markets is as good as it can be, and the inflation doesn't get out of control. Of course, that's what they're supposed to do. Whether they're doing a good job or not, that's a matter of opinion, and that's for you to decide. So the most recent jobs report for the month of June was released in July, and that report beat expectations. It actually smashed expectations. So the report says that the U.S. labor market added a net 147,000 jobs, beating the expectation of 118,000. And the unemployment rate decreased from 4.2% to 4.1%. And because the jobs report says that the labor market is doing so well, well, if you think about it, then that's less pressure for the Federal Reserve to cut interest rates to save the labor markets because the labor market doesn't need any saving, you know, according to the report. Okay, so when you look at the labor market, it supports the arguments for the Federal Reserve to not cut interest rates. Now, I want to show you this video clip of Jay Powell, who's the chair of the Federal Reserve. So he's talking about how healthy the labor market is. And when it comes to inflation, I mean, you're going to see it for yourself. He says that he doesn't want to cut interest rates right now because he wants to see how the tariff inflation develops. So please take a look. You know, from our standpoint, what I can say is that the U.S. economy is in solid shape. Inflation has come down. Unemployment rate remains at 4.2%. As I mentioned, real wages are moving up. It's a good-job creation is at a healthy level. Unemployment, again, as I said, low. Labor force participation in a good place. So-and what we're waiting for to reduce rates is to understand what will happen with, really, the tariff inflation. And there's a lot of uncertainty about that. Every forecaster you can name who, you know, who is a professional, you know, forecaster with adequate resources and forecasts for a living is forecasting a, you know, pretty significant. Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs, because someone has to pay for the tariffs. Now, I want to show you the latest inflation figures. And this is from the month of June. And this is CPI inflation. So as you can see, the rates of inflation has been coming down over the past few years. However, the rate of inflation is still above the Federal Reserve's desired rates of 2%. But now, I mean, you have tariffs in the mix, and that's, you know, of course, affecting inflation. And Powell is saying that the tariffs are going to increase inflation over the coming months. And if inflation is expected to accelerate, then that's a reason to not cut interest rates. And from the most recent CPI inflation reports, we're seeing tariffs accelerating the rate of particularly, no surprise, in goods inflation. So CPI headline inflation has shot up from 2.4% in May to 2.7% in June, which is, of course, a very big jump. And the thing is that retailers are gradually passing along the cost of tariffs to consumers so that they don't stick a shock and lose customers. So therefore, tariffs are expected to further accelerate the rate of over the next few months. According to Jay Powell, he says that if it weren't for the tariffs, then he would have already started cutting interest rates by now. So I want to show you the video clip. Chair, would the Fed have cut more by now if it weren't for the tariffs? So I do think that I think that's right. We're in effect, we went on hold when we when we saw the size of the tariffs and where and essentially all all inflation forecasts for the United States went up materially as a consequence of the tariffs. Okay, so the situation is that, you know, there's a healthy labor markets, which is a reason not to cut interest rates, and inflation is accelerating, which is another reason to not cut interest rates. So that's why, according to the CME FedWatch tool, there is a 95.3% chance that the Federal Reserve does not cut interest rates at their next meeting on July 30th. And you know what, I personally agree with those probabilities. I believe that there's a very high chance that the Federal Reserve does not cut interest rates in July. So if you ask me, they're not going to cut interest rates. Now the next meeting after July is going to take place on September 17th. And there's a 39.3% chance that the Federal Reserve will not cut interest rates by that meeting. Okay, so why are the odds still relatively high that they're going to refuse to cut rates by then? It's because the Federal Reserve is saying that they're going to take a wait-and-see approach on whether to cut interest rates or not. And what they're waiting for are the developments with the tariffs. That's pretty much the biggest one. And they're saying that the effect of tariffs on inflation and or President Trump's policy on tariffs is going to take months to settle. And as you heard Jay Powell say, that there's a lot of uncertainty right now. And I do want to bring this up because this has been getting a lot of attention. And I'm sure that you've seen this in the headlines. So despite President Trump criticizing Jay Powell for not lowering interest rates, like I'm telling you, Jay Powell and the Federal Reserve, they're not going to listen to President Trump, you know, at least not for the time being. So President Trump has been trying to fire Jay Powell, but the President cannot fire the Fed Chair, Jay Powell. Trump has tried multiple times, but the Supreme Court said that Trump needs a valid reason. Okay, so this is Trump's most recent attempt. So this is what happened. So the Federal Reserve was supposed to spend $2.5 billion to remodel their headquarters, but they went over budget by $600 million. And Trump argued that this is cause to fire him. But this was just another attempt by Trump. And it looks like it's not going to go anywhere. And Jay Powell is going to finish off his term. But listen, I don't know if the Federal Reserve is going to cut interest rates in September or October, December or early next year. All I can tell you is that Jay Powell's term is going to end in May of 2026. And Trump's going to appoint a new Fed Chair that's going to cut interest rates aggressively. And if Powell delays rate cuts even longer, then the new Fed Chair is going to cut even more aggressively to make up for it. And of course, when that happens with lower interest rates, that's going to be explosive for stocks, for Bitcoin, for precious metals. And also another thing to think about is that it's not going to be just the interest rate cuts, they're going to switch to quantitative easing. And you know, in layman's terms, that's that's just money printing, if Powell doesn't get that started himself. Okay, so that is the situation right now. July, do not expect any interest rate cuts, like it's just not going to happen. Now I do want to say for the September odds that I showed you, like the probabilities for a rate cut by that meeting, they're going to change dramatically after two events. So the first event is going to be the Federal Reserve FOMC press conference. So everybody's going to be listening to what Powell says, they're going to be trying to interpret his answers, and then that's going to change the odds for a September rate cuts. And the second thing is by I would say mid-August, by then, we're going to have a better understanding of how the tariff situation is developing. Okay, so I'm going to keep you updated on all this. Please subscribe. And thank you for the support. And I wish you a very nice day. Take care.