Tonight at 10 PM, Powell will speak at the Jackson Hole central banking annual meeting. The market is most concerned about: will he hint at a rate cut in September.
Key points:
1️⃣ Rate cut path: Most likely continue to play 'Tai Chi', emphasizing data without making clear commitments.
2️⃣ Policy framework: May weaken the 2020 average inflation target (FAIT), returning to the traditional 'balance between inflation and employment'.
3️⃣ Inflation concerns: Although CPI has decreased, it remains high, and PPI is rising again. He will remind not to be complacent, especially regarding the pressures from the service industry and tariffs.
4️⃣ Labor market: Acknowledge the cooling of employment, but will downplay the importance of single data points, emphasizing comprehensive judgment.
5️⃣ Political pressure: Trump criticizes him daily by name, but Powell is unlikely to respond directly. Central banks fear being labeled as politicized, and he will act as if he hasn't heard.
👉 The market wants to hear 'rate cuts are imminent', but Powell is most likely to leave it ambiguous. The most probable outcome - neither dousing cold water nor being dovish, maintaining neutrality.