Federal Reserve Chair Jerome Powell is set to deliver a highly anticipated speech on Friday at the central bank’s annual Jackson Hole Economic Symposium. The market is eager for any signals regarding a potential interest rate cut.
Powell’s remarks at the three-day gathering, themed “Reassessing the Effectiveness and Transmission of Monetary Policy,” will be the main event, capturing the attention of financial markets worldwide. The speech is scheduled for 10 a.m. EST in Jackson Hole, Wyoming.
Although no surprises are expected in Powell’s address to a crowd consisting of bankers, economists, monetary policymakers, and members of the press, there is anticipation for a hint indicating that the Fed plans to start cutting interest rates as early as the September policy meeting.
“All we need to hear is something like, ‘Based on the numbers, it will probably be appropriate to start cutting interest rates soon,’ a statement similar to Powell’s comments from the last post-FOMC meeting presser,” said Mark Malek, Chief Investment Officer at brokerage firm Siebert, in a note. “Anything other than that can mean big swings up or down for stocks and bonds.”
In June, the Fed’s preferred inflation gauge, the personal consumption expenditure (PCE) price index, slowed to 2.5 percent. The core PCE, which excludes the volatile energy and food components, eased to 2.6 percent.
Powell had previously stated at a House Financial Services Committee hearing in July, “You don’t want to wait until inflation gets all the way down to 2 percent because inflation has a certain momentum. If you waited that long, you’ve probably waited too long because inflation will be moving downward and will go well below 2 percent, which we don’t want.”
Minutes from the July meeting disclosed that a vast majority of participants agreed it was appropriate for the Fed to start cutting interest rates. Furthermore, many believed the central bank could have initiated a rate cut the previous month.
Although one non-voting member of the Federal Open Market Committee (FOMC) thinks it’s time to adjust the institution’s policy, Powell is not expected to announce the size of a potential interest rate cut next month.
While the futures market has overwhelmingly projected a rate cut, there remains uncertainty regarding the magnitude and frequency of forthcoming reductions.

“Right now, I’m not in the camp of 25 or 50. I need to see a couple more weeks of data,” Harker told the business news network.
Officials will evaluate another jobs report, additional inflation data, and another estimate of second-quarter GDP growth before the September FOMC meeting.
However, Malek believes that whether it is a reduction of 25 or 50 basis points, it won’t make much of a difference.
“Do you think that a quarter percentage-point move in overnight, interbank lending rates is going to affect your life positively? No, it really won’t,” Malek stated. “Mortgage rates and some auto loans are more closely tied to longer maturity yields that are largely controlled by bond traders. Even credit card rates, which are tied to the Prime Rate, will not materially impact monthly payments with only a -25 basis-point move.”
In fact, Malek suggests that a substantial rate reduction could potentially have an undesired negative effect.
Ultimately, the financial markets will closely analyze and scrutinize every word uttered by Powell.
“Every little word will be under the microscope,” said Jay Woods, Chief Global Strategist at Freedom Capital Markets.
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