July 3 (Reuters) - With political betting markets showing former President Donald Trump as a clear favourite to return to the White House, the Federal Reserve may be minded to reduce interest rates in September rather than keeping them on hold again. A Fed rate cut on Sept. 18 - the last U.S. monetary policy decision before the presidential election - would front-run the possibility for stickier U.S. inflation if Trump wins on Nov. 5, given the big tariff hikes he has promised, which could have a material impact on foreign exchange rates. Tuesday's dovish comments from Fed Chair Jerome Powell suggest he is keen to cut rates in September. Markets currently see a 70% chance of the Fed reducing rates on Sept. 18, with a cut fully priced for Nov. 7 - two days after the election. There is still scope for a twist in the presidential election tale, as President Joe Biden faces growing doubts from Democrats about his 2024 re-election bid. Related comments: For more click on <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ USD https://tmsnrt.rs/4eNttaW ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Robert Howard is a Reuters market analyst. The views expressed are his own) ((robert.howard@thomsonreuters.com))
