Wall Street is betting on Powell to confirm a rate cut, but a miss could spark negative sentiment
On August 19, according to market data, Wall Street is betting that Federal Reserve Chairman Powell will confirm at the Jackson Hole annual meeting that the Federal Reserve is about to cut interest rates. But as the focus shifts from "whether to cut interest rates" to "how much the interest rate will be cut," stock traders may be disappointed.
"If traders hear that interest rates are about to be cut, the stock market will react positively," said Eric Beiley, Managing Director of Steward Partners Global Advisory Wealth Management. "If they don't hear the information they want, it will trigger a massive sell-off." The market fully expects the Federal Reserve to start cutting interest rates at the September meeting. But on Friday, Powell may be tight-lipped about the timing of the interest rate cut. Given his character, he is also likely to take a cautious and vague approach to revealing how much the Federal Reserve's interest rates may decline after completing the easing. "The market is very confident that interest rates will be cut soon," Beiley said. If Powell does not emphasize that this is the path forward, it will be a huge surprise.
