Give Powell's Jackson Hole speech a precautionary note? Federal Reserve officials say there may not be a rate cut in September

This Friday, ahead of Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole central bank annual meeting, some Federal Reserve officials have shown a pessimistic attitude towards a rate cut next month, seemingly giving a "preventive shot" to those expecting Powell to signal a rate cut. On Thursday, the 21st, two Federal Reserve officials were interviewed locally at the Jackson Hole annual meeting. Among them, Cleveland Federal Reserve President Loretta Mester, who will have voting rights at the Federal Open Market Committee (FOMC) meetings next year, clearly stated that based on the current economic data, the FOMC may not cut rates in September. She also mentioned that if a decision were to be made tomorrow, she would not support a rate cut. As the U.S. stock market approached the end of the morning session, after Mester's remarks against a quick rate cut were released, U.S. Treasury yields collectively accelerated upward. The yield on the benchmark 10-year U.S. Treasury rose by about 4.7 basis points, nearing 4.34%, while the U.S. stock market further rose above 4.34% at midday. The yield on the 2-year U.S. Treasury, which is more sensitive to interest rate prospects, rose over 4.6 basis points, breaking above 3.80%, approaching a three-week high. Before Mester's remarks, earlier on Thursday, Kansas City Federal Reserve President Esther George also expressed hesitation regarding the widely expected rate cut in September at the Jackson Hole annual meeting. Cleveland Federal Reserve President Clearly Opposes Immediate Rate Cut Mester explicitly expressed her opposition to a current rate cut during the Jackson Hole annual meeting. She pointed out that inflation in the U.S. remains too high and has been on the rise over the past year, which is her main reason for opposing a rate cut. She stated: "We have overlooked inflation and need to remain highly focused on it." "Our inflation rate is too high and has been on an upward trend over the past year. Based on the information I have, if the FOMC were to meet tomorrow, I see no reason to cut rates." Mester acknowledged concerns about the labor market but believes that the unemployment rate is still close to her estimate of full employment. She said, "When I weigh these factors, I think it is important for us to maintain a moderately tight policy stance to continue bringing inflation back to target levels." As a voting member of the FOMC meetings next year, Mester's statements suggest that future Federal Reserve monetary policy decisions may face divisions. Kansas City Federal Reserve President Questions Market Expectations Although not as explicitly opposed to an immediate rate cut as Mester, George has expressed skepticism about the market's strong expectations for a rate cut in September. George stated: "We are in a very good position right now, and I think that adjusting the policy rate now really requires very clear data." George mentioned that she is not convinced that the Federal Reserve has made sufficient progress in reducing inflation. She estimates that the inflation level may be closer to 3% rather than 2%, indicating that the Federal Reserve still has work to do to achieve the 2% inflation target. George particularly emphasized the challenges in achieving the inflation target. She said, "The last mile seems to be very difficult, and many people, including myself, believe that the last 1 percentage point of inflation in the system presents real, tangible costs." Market Expects Decreased Probability of Rate Cut in September, Still Above 70% The CME's FedWatch tool shows that during intraday trading on Thursday, the U.S. federal funds rate futures market expected the probability of a 25 basis point rate cut at the Federal Open Market Committee (FOMC) meeting on September 16-17 to be less than 72%. On Thursday, the early trading of U.S. stocks saw S&P Global unexpectedly report an August U.S. manufacturing PMI preliminary value that reached a three-year high. Following the data release, investor bets on a rate cut in September continued to cool. The expected probability of a rate cut in September on Thursday had significantly dropped from over 82% on Wednesday. Statements from two Federal Reserve officials, Harker and Schmid, indicate that there are internal disagreements among policymakers regarding the timing of a rate cut in September. This disagreement makes Powell's speech on Friday at Jackson Hole even more significant. Investors will closely monitor any hints Powell may provide regarding the September FOMC meeting