What you need to know before Fed
chairman Powell's speech today.
Markets await Fed chairman Jerome
Powell's speech at Jackson Hole. It is
described as "the most risky speech of the
year".
This talk will take place in an environment
where concerns that the Fed is late for
interest rate cuts are growing and this
situation is increasing the pressure on the
Fed. According to the Washington Post,
Powell will give the riskiest speech of the
year.
Whether the Fed will cut interest rates in
September is no longer a question. What is
not known is whether this interest rate
reduction will be 25 or 50 basis points.
Powell avoided giving important details in
his past Jackson Hole speeches. While
Fed president can give messages that an
interest rate cut will be made in
September, he can stay away from hinting
about the size of the cut.
As of today, the markets predict that the
Fed will reduce interest rates by 100 basis
points by the end of the year. We have
three meetings ahead of us, September,
November and December. Therefore, in
order for the market to be expected, a
discount of 50 basis points is required in
one of these meetings. Fed officials, on
other hand, have closed the door to this
possibility in their speeches so far.
