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Will the interest rate cut in September cool down? The PPI exceeding expectations is the trigger.

After reviewing this PPI data, my first reaction is: the Fed's rate cut in September may be off the table. The July PPI exceeded expectations both year-on-year and month-on-month, and the script for declining inflation suddenly hit a snag. The problem is that the Fed's policy rhythm is a precision instrument, and any abnormal fluctuations in the PPI will make Powell as cautious as a delivery guy walking on a glass bridge.

The biggest prerequisite for interest rate cuts is controllable inflation, but if the PPI, which is a production-side indicator, continues to rise, the CPI is likely to follow suit in the future. If the Federal Reserve hastily cuts interest rates against a backdrop of high PPI, it is equivalent to actively opening the back door for inflation—this, in the history of monetary policy, is essentially tantamount to "self-destruction of image."

Some people in the market argue that the PPI is just an unexpected result for one month and does not represent a trend reversal; it may be influenced by short-term factors such as energy and food. However, the Federal Reserve will not only consider optimistic explanations; they are focused on the "worst-case scenario." Therefore, the possibility of not lowering interest rates in September has now increased significantly, especially if the CPI does not show a clear decline.

For the cryptocurrency circle, this news is a short-term negative—because a delayed interest rate cut means a postponed expectation of liquidity. However, in the long run, macro fluctuations may actually make the crypto market more active. As long as the Federal Reserve ultimately has to cut interest rates (even if it's delayed), smart money will position itself in advance, betting on the first wave of a policy shift. After all, the creed of the crypto world is: expectation is profit, even if the expectation has not yet materialized.