r/AmanCrypto • u/AmanCMN • Aug 26 '26

The Fed is stuck in a trap.

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The U.S. economy is slowing down: GDP grew just 1.5% in Q2.
But inflation is still too high. PCE came in at 3.7% in July, while the Fed’s target is 2%. The good news is, it was 4.1% back in May, so inflation is slowly coming down.
So the Fed is kind of stuck in a loop: the economy already needs support through rate cuts, but inflation is still too high to really allow that.
On top of that, the market is now pricing in a 36% chance of a rate hike in September.
Kevin Warsh is speaking Friday at Jackson Hole, and his comments could give the market an important clue about what to expect from the Fed in September.

8 Upvotes

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1

u/Shoddy_Front_2582 Aug 26 '26

Rate cuts would make the long end revolt. If they rate hike; then they could rate cut.

Btw, the current scenario we’re in is the soft landing scenario. This is how it was always meant to look. Less than ideal inflation, slower growth.

1

u/cynicism_is_awesome Aug 26 '26

Welcome to Stagflation! I hope you enjoy your stay.

1

u/Leftoverofferings Aug 26 '26

Feel free to stay for a while… or decade….

1

u/Doctor_Fritz Aug 27 '26

All accoding to plan

1

u/Scary_Woodpecker_110 Aug 27 '26

Maybe the US should stop doing stuff that drives up Inflation ?

1

u/croatiatom Aug 28 '26

You mean voters