AFP :
US Federal Reserve chair Jerome Powell is widely expected to use a keynote speech at a major central banking conference on Friday to signal support for cutting interest rates ahead of next month’s rate decision.
The annual Jackson Hole Economic Symposium in the US state of Wyoming gives Powell a global platform to enlighten financial markets about the Fed’s thinking, a few weeks after he said policymakers could cut rates “as soon as” September if the labor market remains solid and inflation continues to ease.
The Fed’s benchmark lending rate currently sits at a 23-year high of between 5.25 and 5.50 percent, cooling demand in the world’s largest economy ahead of November’s presidential elections, in which inflation and the cost of living have taken a central role.
“My sense is that chairman Powell is going to use this symposium to kind of foreshadow what’s already largely placed in the market,” Nationwide Mutual chief economist Kathy Bostjancic told AFP.
Powell will likely signal — but not explicitly say — that the Fed “is looking to start to cut interest rates sooner rather than later, and it’s most likely going to be in September,” she said.
“He will likely signal that a rate cut is coming soon,” Deutsche Bank chief US economist Matthew Luzzetti told AFP. “However, I think he will not indicate the probable size of that rate cut.”
Several other high-ranking central bank officials are on the schedule for the three-day gathering in Wyoming’s Grand Teton National Park, which this year has the theme of “Reassessing the Effectiveness and Transmission of Monetary Policy.” After holding its key lending rate at a two-decade high for more than a year, the US central bank now seems poised to start cutting rates in September, as inflation continues to ease towards its long-term two percent target.
While inflation has eased, the labor market has shown signs of cooling — though still remaining solid by historical standards — and economic growth has been resilient. The Fed has a dual mandate from Congress to tackle both inflation and unemployment, and has been signaling in recent months that the risks to the two sides of its mandate are now coming into better balance.