The chairman of the US Central Bank may have used his keynote speech on the Jackson Hole Economic Policy Symposium last year to indicate that the time had come for interest rates – but analysts warn that this time there is a more turbulent image.
“The Fed is in a heavy position because inflation above target and downward risks for the labor market continues to increase,” says Ryan Sweet, head -American economist at Oxford Economics.
Powell will hold his last Jackson Hole speech as Fed Chair at 10:00 am Eastern Time (1400 GMT) on Friday. His term at the helm ends in May 2026.
“Whether they were cut or not in September will probably depend on data that Powell will not control,” Sweet told AFP on the symposium.
Nevertheless, this year, the independent Fed is under the intensification of the pressure of the Trump administration to lower the rates. -‘Not the intention to be bullied’ -Trem has not made any secret of his contempt for Powell, repeatedly said that the FED chairman ‘too late’ was in reducing interest rates while he has taken a ‘Numbskull’ and ‘Moron’. Praise the central banker.
Trump ultimately supported the idea, but this week separately called for the resignation of a Fed Gouverneur, Lisa Cook, about claims of mortgage fraud.
Cook pushed back and said in a statement that she “was not going to be bullied to resign,” while she added that she would take questions about her financial history seriously.
– jobs, inflation risks –
“We expect Powell to comment on both the latest banengies and the latest inflation data before they enable an assessment of the appropriate monetary policy in the context,” said HSBC -American economist Ryan Wang in a note.
The FED, which is holding its next policy meeting in mid -September, has steadily kept interest rates with a range of between 4.25 percent and 4.50 percent since the last reduction in December.
By keeping the rates unchanged, policymakers mentioned the resilience on the labor market, while they kept an eye on the effects of the broad rates of Trump at the largest economy in the world.
Higher rates for import risks that fuel price increases, according to analysts. The Fed usually keeps the interest rates at a higher level to curb inflation sustainably.
The desired inflation meter of the FED rose in June by 2.6 percent of a year ago, and a measure that protruded the volatile food and energy segments was higher by 2.8 percent. Both figures are above the long -term objective of the FED of two percent.
But cracks have since emerged on the job market, which could ask for lower rates to stimulate the economy.
Official labor data released this month showed that hiring in May and June was much weaker than originally estimated.
Hours after the data was released, Trump ordered the firing of the Commissioner of the Labor Statistics and eventually chose an economist from a right -wing think tank as her replacement.
The softening of employment has expressed concern among civil servants, where Fed Governors Christopher Waller and Michelle Bowman voted against the general decision in July to keep the rates stable for a fifth consecutive meeting.
Both would have preferred the interest rates with 25 basic points. It was the first time since 1993 that two Fed governors did not agree.
According to minutes of the meeting released on Wednesday, Bowman argued that the gradual reduction of rates would help to cover itself against further cooling in the economy and the risk of damage to the labor market.
FED officials remain divided on whether Trump’s rates would have a one-off effect on inflation or would cause more persistent effects.
For the time being, the Fedwatch tool of CME Group shows that the market sees a 73.5 percent chance that the Fed will lower rates in September.
“With even more employment data, we do not think that Powell can lead to the relaxation during the next meeting,” said JPMorgan analysts in a recent note.
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