A big week is coming up for the US Federal Reserve and central bank enthusiasts.
The Kansas City Fed’s annual Economic Policy Symposium starts on Thursday evening in Jackson Hole, Wyoming. Fed Chair Jerome Powell in remarks on Friday is expected to unveil the Fed’s new policy framework — the strategy it would use to achieve its inflation and employment goals.
Powell might also drop some hints about the Fed’s thinking ahead of its policy meeting next month. Officials have left interest rates on hold so far this year as they wait to see how US President Donald Trump’s tariffs impact the US economy.
Photo: Bloomberg
With inflation still above the Fed’s 2 percent goal and signs of a slowdown in the labor market, policymakers have become divided on when to resume rate cuts. Powell’s speech could give Fed watchers a fresh update on how much support there is to lower rates next month — at a time the Trump’s administration is piling on the pressure to start easing.
Data over the past week likely did little to shift opinions on inflation and the economy. The core consumer price index, which excludes food and fuel, rose last month by the most since the start of the year. However, the cost of tariff-exposed goods did not rise as much as feared.
However, a separate report on wholesale inflation suggested price pressures on companies are mounting. A fresh read on retail sales showed US consumers flexed a bit more muscle over the past two months, although a decline in sentiment pointed to anxiety about inflation and the job market.
“Federal Reserve Chair Jerome Powell has the opportunity to settle the speculation with his speech at the annual Jackson Hole Symposium [Friday]. Last year, he used the gathering of central bankers to telegraph that the Fed was ready to cut rates, but the circumstances are different, and we don’t think he’ll be as frank this year,” economists Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins at Bloomberg Economics said in a note.
The global nature of the Jackson Hole conference also offers an opportunity for Powell’s peers to express their support amid persistent criticism from Trump. Central bank independence is likely to be a topic on the sidelines of the confab.
Meanwhile, a handful of economists would present new research papers during the meeting, and there is usually a panel featuring heads of some of the world’s biggest central banks.
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