As the date of the Federal Open Market Committee (FOMC) Meeting in September 2025 (September 16-17) approaches, financial markets are increasingly heated in their predictions about the direction of interest rate policy. In the next three weeks, a series of important economic data releases will provide crucial references for the Fed's decision-making. From inflation conditions to employment market performance, to overall economic vitality, each indicator could influence the Fed's judgment on the interest rate path. Let us delve into three categories of key indicators that will become the focus of the market.

First, the core Personal Consumption Expenditures Price Index (core PCE) in the inflation data is the most closely watched. As the Fed's preferred measure of inflation, core PCE excludes the volatile prices of food and energy, making it a better reflection of long-term inflation trends. The July core PCE data will be released on August 30, and if the year-on-year growth rate continues to slow, it may enhance market expectations for interest rate cuts. Conversely, if inflation proves to be stickier than expected, the Fed may maintain a cautious stance. Although the Consumer Price Index (CPI) is not the Fed's preferred indicator, if the CPI data released on August 12 shows a significant decline in inflation, it may also provide additional support for interest rate cuts. Furthermore, the Producer Price Index (PPI), as a leading indicator of CPI, will also influence market expectations for inflation with its releases on August 15 and September 12.

Secondly, the employment market data, especially the non-farm payroll report and unemployment claims data, will reveal the resilience of the economy. The strength of the labor market directly affects the Fed's judgment on whether the economy is overheating or cooling down. If employment data shows significant weakness, it may prompt the Fed to consider rate cuts more quickly.

Finally, economic activity indicators such as retail sales, industrial production, and consumer confidence will comprehensively reflect the economic situation. The overall performance of these data will help the Fed assess whether the economy has sufficiently cooled down, thus providing a basis for potential interest rate cut decisions.

As these key economic data are released, market participants and policymakers will closely monitor every detail to predict the actions that the Fed may take. Regardless of the final outcome, this data will play an important role in shaping the direction of future economic policy.