US Slightly Dropped to 2.6% YoY in PPI during August

Expectations for the Fed’s September Rate Cut and Economic Data Impact

The Federal Reserve is expected to implement an interest rate cut at its September 2025 meeting, with the market generally anticipating a reduction of at least 25 basis points and some institutions considering the possibility of a 50 basis point cut. The August nonfarm payrolls increase came in well below expectations at only 22,000, while the unemployment rate rose to 4.3%, the highest in nearly four years, indicating a weakening labor market. Meanwhile, the Personal Consumption Expenditures (PCE) price index for July rose just 0.2% month-over-month, showing easing inflation pressures and supporting the rate cut decision. The benchmark rate is projected to be lowered to a range between 4.00% and 4.25%, marking the first cut since late 2024. Second paragraph: Economic Data Influencing the Cut Nonfarm payrolls rose by 22,000 in August, a marked slowdown from July, with May and June payroll data revised downwards by a total of about 258,000, reflecting labor market softening; The unemployment rate increased to 4.3%, with long-term unemployed reaching approximately 1.8 million, accounting for around one-quarter of total unemployment; The July PCE price index rose by 0.2% month-over-month, with core inflation steady near the Fed's 2% target for three consecutive months; Wage growth has slowed, easing cost pressures on businesses and helping contain future inflation risks; U.S. equity markets rose to new highs in August on rate cut expectations, with technology and semiconductor sectors especially strong. Third paragraph: Summary and Outlook The September rate cut is a timely response to labor market weakness and is expected to ease financial conditions, boosting corporate investment confidence and market liquidity in the near term. Over the next 1-2 months, the equity market is likely to continue rebounding, though close attention should be paid to inflation data for any resurgence risks. In the medium term (within six months), if inflation remains controlled and the labor market stabilizes, the Fed may deliver one or two additional rate cuts to support economic growth. Investors should closely monitor labor and inflation data to gauge future policy directions and their impacts on asset prices.