Why Fed Chair Powell’s Jackson Hole Speech Matters

Like the Olympics, but for the Fed

Every year, central bankers from around the world meet in scenic Jackson Hole, Wyoming, for the Jackson Hole Economic Symposium. The speeches at this conference are always highly anticipated by the markets, and this year is no exception.

Federal Reserve Chair Jerome Powell is due to speak later today, in what’s probably the most anticipated moment of the whole event. But why is it so important?

On Your Mark, Get Set, Rate Cut

The Fed is widely expected to cut interest rates in September. The chance of a rate cut next month, as represented by the CME’s FedWatch tool, is 100%. The questions that remain are how many rate cuts might we see over the next Fed meetings, and will they be deeper than the quarter percentage point increment the central bank usually goes by.

Recent economic data has fueled more speculation, and made investors and economists hungry for some clarifying words from Powell. It included a massive revision to U.S. labor market data, which was off by more than 800,000 jobs between April 2023 and May 2024. As the job market has already been softening, the massive revision was especially notable.

There are also questions about the economic outlook. Even though inflation has finally begun to cool, GDP growth has slowed as well. Powell’s speech has the opportunity to ease or stoke any or all of these concerns. Historically, he has used his speech at Jackson Hole to deliver particularly impactful messages — and this one in particular comes at a pivotal time for the Fed.

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