Last week’s Jackson Hole conference gave us a clearer picture of where the Fed stands heading into September. Powell kept his tone cautious, acknowledging progress on inflation but stopping short of declaring victory. The message: they’re willing to cut rates, but only if the data keeps pointing the right way. Between now and the Fed’s September 17th meeting, we’ll get one more jobs report (September 5) and one more inflation report (September 11). Unless those numbers come in surprisingly hot, the path is set for a cut.

Markets are now pricing in two to three moves before year-end. That optimism is balanced by a reminder from Powell: inflation isn’t fully tamed, and the Fed doesn’t want to ease too quickly. Rates have already drifted lower on the anticipation of cuts, but we’ve seen before that bond markets can turn quickly—sometimes even spiking after the Fed actually cut rates as we saw last year.

Looking ahead:

• The next Fed meeting is mid-September.
• August’s jobs and inflation reports will heavily influence the decision.
• A 0.25% cut is widely expected, but the Fed could surprise if the data softens more than expected.