“Most Fed members wanted more data on inflation before cutting rates, which speaks to their concern about cutting too soon and risking a reflationary response,” says Bret Kenwell, investment analyst at eToro. Ahead of the Jackson Hole symposium, which kicks off today, Powell’s speech “will be closely scrutinized”: “Investors will be looking for more assurances on this and possibly clues about the magnitude of the cut,” he stresses.
Most Fed policymakers wanted more data on inflation before cutting rates, reflecting concerns about cutting too soon and risking a reflationary response.
With the “vast majority” of Fed policymakers seeing a September rate cut as appropriate ahead of the disappointing monthly jobs report, it seems almost certain that the Fed will cut rates next month amid cooling inflation and softening jobs data.
Chairman Powell's speech at Jackson Hole will be closely scrutinized by investors. At the last Fed meeting in July, Powell laid out a fairly clear roadmap for a rate cut in September. Investors will be looking for further assurances on that and possibly clues as to the magnitude of the cut.
The question is not whether the Fed will cut rates in September, but rather how much. Right now, the market is pricing in a 25 basis point cut rather than a 50 basis point cut, which seems the more likely outcome right now, provided the August jobs report is not a drastic disappointment.
This content is for informational and educational purposes only and should not be considered as investment advice or an investment recommendation. Past performance is not an indication of future results. CFDs are leveraged products and carry a high risk to your capital.
