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00:00Let's get straight to our top story. Fed Chair Jerome Powell ending his final Jackson Hole speech with a bang, delivering his strongest signal yet that rate cuts are coming as dovish comments were met with cheers from markets and jeers from President Trump, who says the easing cycle should have begun a year earlier. Heightened political pressure on the Fed was a central theme at this year's symposium, leading to a tense affair that underscored the challenges ahead for the US central bank. Also adding to concerns is Trump's threat to fire a Fed governor, Lisa Cook, if she refuses to resign over mortgage fraud accusations. Cook's potential removal would give Trump the chance to shape the Fed Board in his favor and exert more influence over monetary policy. Meanwhile, other policymakers and economists have been warning against political interference at central banks. And, you know, in my IMF days, I have seen close hand what happens when a central bank stops being independent or when its independence is under threat. It becomes dysfunctional. It starts doing things that it shouldn't do. And the next step is, is, is yeah, it is disruption. It is instability, if not worse. So I think that this is, I think it's, it should not be debated. This is the fifth time in the last five years that there has been allegations against a Fed official. And already four of them have had to resign. So what I'm concerned about is that there seems to have been a culture that has developed at the Fed that has resulted in these four resignations. But I am very worried about preserving Fed independence. Well, let's get some more insights now on the Fed with Thu Ha Chow, head of fixed income Asia at Robeco. Thu, thanks so much for joining us. I want to get the independence question out of the way straight. I mean, there will be a new Fed chair next year. We can say that with some certainty. But do you think that's going to result in any meaningful change to monetary policy? Because, of course, Jay Powell was a Trump appointee and he has acted independently? Well, we hope so. And I think what is also important for the next chairman is that he's seen to be perceived as actually independent, because, again, when you have kind of doubts on the central bank's independence, they can actually help make us misinterpret, you know, decisions that otherwise would actually be clearly the right decisions to be made. So I think not only does he have to be seen to be independent, but he has to be seen to be perceived by the market as independent, too. Do you feel that there could be any real risk to Fed independence, or is it just the optics and the idea of that enough? I think that this is it's a very difficult juncture because we're having, let's say, a very pivotal point in the economy and in a cycle where actually in terms of the kind of action that we're expecting, isn't an easy one to navigate. So interpretation on either side could be very much something that we have to kind of be concerned with. So as we do that, we have to kind of really decide how that interpretation where things are unsure. For example, on this action now that has been taken by Powell shouldn't actually be in debate. It should be very clear that, you know, the data so far indicates that, you know, a pivot towards looking more at the labour market is more warranted. But the fact that we are actually having to debate that this is the right decision is a concern, I think. Yeah, well, Jay Powell to date has remained firm to sticking to the data, looking at the data, being independent. And we heard a speech there in Jackson Hole, the market interpreting that as dovish. Did you hear anything from that speech that has changed your view on the path forward for the Fed? I think he's made it very clear that, you know, I think a cut by saying that it's restrictive, that the cuts should should be something very clearly on the way how much that is and where the uncertainty comes is actually what happens post that what happened with the data. We all know that actually a lot of the effects from the tariff changes are actually more likely to kind of come through in the fourth quarter. And then what happens then with both the data not only on the price changes but actually also on the impact on on investments, etc.. So again, this kind of leaves more uncertainty for what happens in the fourth quarter.

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Robeco's Chow on the Fed's Next Move

Thu Ha Chow, Robeco's Head of Fixed Income Asia, shares her insights on the Fed's political independence and Chairman Jerome Powell's signaling of a potential interest rate cut at the next policy meeting. (Source: Bloomberg)

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