August CPI Becomes a Key Variable as Fed Rate Hike Expectations for September Rise
FastBull FeaturedSummary:
Waller: The Fed's September rate decision will depend heavily on August CPI; a stable U.S. labor market and rising services-sector price pressures are strengthening expectations for a rate hike...
【Highlights】
1. Israeli prime minister says Israel has the capability to overthrow the Iranian regime
2. Zelenskyy says the U.S. will hold separate talks in Moscow and Kyiv
3. Trump calls reports of U.S. ammunition shortages "treason"
4. Waller: September rate decision will depend heavily on August CPI
5. Stable U.S. labor market and rising services-sector price pressures strengthen rate hike expectations
【Details】
Israeli Prime Minister Says Israel Has the Capability to Overthrow the Iranian Regime
On September 3 local time, Israeli Prime Minister Benjamin Netanyahu said at an event at the Israel Defense Forces headquarters that he believed Israel had the capability to completely eliminate the threat posed by Iran and overthrow the Iranian regime.
Netanyahu said the achievements Israel had made over the past three years, including during its military operations against Iran, were historic. He said Iran was "shaking," weaker than ever, and fighting for its survival.
He said one of Israel's main objectives was to completely eliminate the Iranian threat—in other words, to overthrow the regime. Netanyahu added that this goal was within reach and was not impossible to achieve.
Zelenskyy Says U.S. Will Hold Separate Talks in Moscow and Kyiv
On September 3 local time, Ukrainian President Volodymyr Zelenskyy said the United States had confirmed that separate talks would be held in Moscow and Kyiv, with the Ukrainian side expecting the Kyiv meeting to take place in the coming days.
Zelenskyy said the Ukrainian negotiating team had maintained close, round-the-clock communication with the U.S. delegation and had just held a dedicated working meeting to advance preparations for the talks. A preliminary schedule has already been drawn up.
Zelenskyy emphasized that Ukraine was fully prepared and would hold substantive talks with the U.S. side in Kyiv, with both sides represented at an appropriate level and with a practical agenda.
Trump Calls Reports of U.S. Ammunition Shortages "Treason"
On September 3, U.S. President Donald Trump posted on social media accusing the media of failing to accurately report the state of U.S. weapons and ammunition stockpiles. He also said he intended to seek reimbursement from European countries for U.S. military aid provided to Ukraine.
Trump said that those who refused to accurately report on the U.S. military operation against Iran were "traitors," adding that the United States had virtually unlimited supplies of advanced and medium-grade ammunition—far more than could possibly be needed for the current operation or any other, highly unlikely, war.
He also said the United States was producing ammunition on an unprecedented scale and was stockpiling supplies in preparation for any potential contingency. According to Trump, the ammunition was being reserved for the United States rather than sold to other countries, although arms sales to allies would soon resume.
Trump further claimed that the Biden administration had given Ukraine far more ammunition for free than the United States had used in Iran. He said tens of billions of dollars had been provided to Ukraine and NATO at no cost, even though European countries would have been willing to pay had they been asked at the time. Trump said the United States would now seek to recover those funds, although "a little late."
Waller: September Rate Decision Will Depend Heavily on August CPI
Federal Reserve Governor Christopher Waller said his next interest-rate decision would depend heavily on the inflation data for August, which is due to be released next week.
If inflation continues to move toward the Fed's 2% target, Waller said he would be willing to support keeping the policy rate at its current level. However, he warned that a rate hike remained a possibility. If the inflation data come in hotter than expected, he said he would consider raising rates at the September 15–16 meeting.
Waller noted that interest rates are currently only modestly restrictive on aggregate demand, and that inflation would not necessarily need to accelerate significantly for him to shift toward supporting tighter monetary policy.
He said inflation remains well above the Fed's 2% target, but is gradually and steadily moving toward it. Waller said he preferred to exercise some patience with the upcoming data to confirm that price pressures were cooling. He added that he was not suggesting waiting until next year, but that it would be prudent to wait and see whether conditions improve.
U.S. Labor Market Remains Stable as Rising Services-Price Pressures Strengthen Rate Hike Expectations
U.S. initial jobless claims rose by 2,000 to 206,000 last week, while layoffs remained low, indicating that labor-market conditions remain stable. This gives the Federal Reserve more room to focus on inflationary pressures stemming from the conflict in the Middle East.
Meanwhile, the ISM Services Prices Paid Index surged to a three-year high in August, further highlighting the inflation challenge. Persistent and intensifying price pressures have led economists to expect the Federal Reserve to raise interest rates before the end of the year.
Separately, the U.S. trade deficit widened by 24.4% in July to $88.6 billion, while the trade deficit with China increased to $17.36 billion.
【Today's Key Events】
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