Recently, the topic of the Fed's interest rate cuts has become the focus of market attention. When formulating monetary policy, the Fed mainly focuses on two key indicators: employment conditions and inflation levels. Generally, when the labor market is weak or the inflation rate is low, the Fed tends to lower interest rates.

However, the current economic situation presents a complex scenario: the job market is starting to show signs of weakness, which should support a rate cut decision; but at the same time, inflationary pressures have increased, which is unfavorable for a rate cut. Faced with this dilemma, Fed Chairman Powell has repeatedly mentioned 'employment risks' and 'inflation risks' in recent speeches, trying to seek a balance between the two.

In fact, the Fed's policy shift was not a sudden idea, but rather premeditated. As early as April this year, when trade tensions escalated, Powell had already signaled that adjustments to the Fed's policy framework would be completed before September. This move can be interpreted as paving the way for potential future interest rate cuts.

It is worth noting that the Fed has consistently emphasized its independence in the policy-making process. Despite external calls, including from certain politicians, for interest rate cuts, the Fed has maintained its decision-making independence. However, some observers believe that this "independence" of the Fed may be merely superficial, and that in reality, a consensus on its policy direction has long been reached internally.

Overall, the challenge currently faced by the Fed is how to find a balance between maintaining economic growth and controlling inflation. The future direction of monetary policy will continue to be influenced by the performance of the labor market and the level of inflation, and market participants need to closely follow the changes in these two key indicators.