Focus on the Fed

Macroeconomic update for September 2025

This year’s focus on rate cuts has put Jerome Powell under mounting pressure as Fed chair. Earlier this year, markets briefly prepared for a premature departure when Donald Trump raised the prospect of firing him, only to settle once the president walked it back. For now, expectations are that Powell will remain in place through year-end. What’s more troubling to us, however, is Trump’s attempt to remove Fed Governor Lisa Cook and the growing chorus of allies accusing Powell of mismanagement — a move seen as an unprecedented challenge to the central bank’s independence. The Multi Asset Boutique shares its views on the latest headlines and the rate-cut discussion in the latest CIO Monthly video.

Key Takeaways

1. A September cut?    
Markets may have taken Powell’s speech at the Jackson Hole symposium in Wyoming and the Fed’s latest meeting as signs of an imminent rate cut – yet we believe the case isn’t that clear-cut. We believe if a September cut comes, it should be driven by softer data – not political pressure.

2. What does the macro data say?
Growth and hiring have slowed somewhat, and unemployment has edged up, but inflation remains above target, and tariffs could add further price pressure.

3. Equities on a roll
Positive sentiment, partly driven by rate-cut expectations and a strong second-quarter earnings season, has pushed stocks higher.

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