❓WHAT HAPPENED: The Producer Price Index (PPI) for August fell by 0.1 percent, defying economists’ expectations of a 0.3 percent increase.
👤WHO WAS INVOLVED: President Donald J. Trump, Federal Reserve Chairman Jerome Powell.
📍WHEN & WHERE: August’s PPI data was released on Wednesday, September 10, 2025.
🎯IMPACT: The PPI and jobs numbers have shifted the broader interest rate discussion ahead of next week’s Federal Open Market Committee (FOMC) meeting from whether the Federal Reserve will cut rates to how much it will need to cut rates.
The Producer Price Index (PPI) for August fell by 0.1 percent, defying economists’ expectations, which predicted a 0.3 percent increase. Importantly, the data suggest that inflation continues to fall, adding further pressure on the Federal Reserve and Chairman Jerome Powell, dubbed ‘Too Late’ by President Donald J. Trump, to begin cutting interest rates at next week’s Federal Open Market Committee (FOMC).
“Just out: No Inflation!!! ‘Too Late’ must lower the RATE, BIG, right now. Powell is a total disaster, who doesn’t have a clue!!!” President Trump wrote in a post on Truth Social on Wednesday morning, reacting to the PPI news. The year-over-year headline PPI numbers were even more stunning, falling to 2.6 percent, while expectations were 3.3 percent.
In August, Federal Reserve Chairman Jerome Powell signalled the central bank would likely shift its current interest rate policy toward reducing borrowing costs at the September FOMC. The likelihood of a rate cut has only increased since then, with the August jobs report containing strong signs that the U.S. labor market continues to cool.
Concerningly, the Bureau of Labor Statistics (BLS) annual benchmark revision suggests there has been little to no real job growth in the U.S. for several years—an indication that the Federal Reserve may have held interest rates too high for too long. The National Pulse reported on Tuesday that the BLS revised downward the total number of jobs created between April 2024 and March 2025 by a shocking 911,000. This follows last year’s revision for April 2023 to March 2024, which saw 818,000 fewer jobs created than initially reported.
The PPI and jobs numbers have shifted the broader interest rate discussion ahead of next week’s FOMC from whether the Federal Reserve will cut rates to how much it will need to cut rates. Increasingly, expectations appear to be pointing to a 50 basis point (bps) cut rather than the 25 bps cut many were forecasting just last week. Among those concerned about the U.S. having entered a possible deflationary cycle, there are mounting calls for an even more aggressive 100 bps cut.
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