#PowellWatch 🔷Jerome Powell has the ideal platform on Friday to send a clear signal that the Federal Reserve is close to resuming interest rate cuts. But the economy is not giving him an equally clear signal that now is the time. The Fed Chair's annual speech in Jackson Hole, Wyoming, may be an opportunity to signal changes in monetary policy. Powell used it for that purpose last year and shortly after announced a significant cut. President Donald Trump is pressuring him heavily to repeat the feat. The problem is that key economic indicators are not all pointing in that direction. A couple of weeks ago, when the latest employment report revealed a drop in hiring, the arguments for a rate cut seemed definitive. Then came the largest increase in wholesale prices in the U.S. in three years, which fueled concerns about inflation driven by tariffs, keeping Fed bankers on hold so far this year. Last month, Powell described the labor market as strong and monetary policy as well-positioned. Investors will be paying close attention to any change, no matter how small, on either of these two fronts, as it could open the door to a rate cut at the next Fed meeting on September 16 and 17. However, since more economic data will be released before that date, it is possible that the Fed Chair will prefer to keep his message carefully ambiguous.

“Although I expect him to generally point to a rate cut at the next meeting, I believe he will condition it on a message that is very data-dependent,” said Jonathan Pingle, chief economist for the U.S. at UBS Securities. “I don’t think he will confirm it.” This will be the last speech he gives at the annual symposium before his term as chair expires next May, and the context is one of the most turbulent.