It has been less than a few days since Federal Reserve Chairman Powell will deliver a speech at the Kansas City Fed's annual central bank conference in Jackson Hole, Wyoming, at 10 AM Eastern Time on August 22 (10 PM Beijing Time) to assess the economic outlook and the Fed's policy framework. The major investment banks show a clear divergence in their expectations for a rate cut following Powell's speech.
State Street Investments expects Powell to pave the way for a rate cut in September that will continue until the end of the year. UBS holds a similar view, suggesting that Powell may hint at the Fed's inclination to cut rates in September given last week's data.
However, Russell Investments has a different opinion, believing that the Jackson Hole meeting may cool expectations for a Fed rate cut, with a September rate cut being 'possible' rather than 'certain,' and that the cut will be 25 basis points, not 50 basis points. ING noted that recent comments from Fed officials (Daly, Cook, and Kashkari) expressing concerns about the deterioration of the job market seem to indicate that the official stance at the Jackson Hole central bank meeting will shift to a more dovish tone.
Mitsubishi UFJ mentioned that there is a risk in the Jackson Hole meeting, as Powell may not provide a clear signal on the timing of the next rate cut, allowing the Fed more time to assess upcoming data before the September FOMC meeting, which may help alleviate downward pressure on the dollar in the short term. Bank of America is also skeptical about the Fed cutting rates this year; Powell stated in July that as long as the unemployment rate remains within a narrow range, he would be satisfied with low employment growth, and this assumption is gradually becoming a reality, with the Jackson Hole speech being Powell's opportunity to 'walk the talk.'
