A major speech from Powell at Jackson Hole: This is what Wall Street expects from the Fed. Federal Reserve Chairman Jerome Powell is set to deliver what is certainly his last major speech at the central bank's annual conference today, during one of the most tumultuous periods in its history.
In recent days, comments from Federal Reserve members have increased that steer the market away from full belief in a rate cut at the September meeting. Both Goolsbee, Hamak, and Schmid stated that current interest rates are close to neutral levels and that there is no urgent need for a cut at this time. If Friday's speech at Jackson Hole goes as the first seven years of Powell's tenure, it will appear calm and cohesive even if it hides the pressure he and his colleagues have faced throughout the year. Michael Arone, Chief Investment Strategist at State Street Global Advisors, said: "He has done a good job in terms of maintaining the Fed's independence, ignoring the noise and some questions he receives, and focusing on data dependence and the Fed's dual mandate. He has taken the right path regarding the Fed's independence and some pressure he clearly receives from the Trump administration. So I think he will continue to somewhat walk this line."
Indeed, President Donald Trump has continued a near-constant campaign of criticism against Powell and his colleagues. As he did throughout most of his first term, Trump pressured Powell to cut interest rates. But in recent days, the President's attacks on the Fed have gone beyond monetary policy. Earlier this summer, the White House attacked the Fed for a major renovation project at its headquarters in Washington, D.C. This coincided with a period when Trump considered firing Powell, although he later backed off that idea. Then this week, the administration focused on Fed Governor Lisa Cook, accusing her of misconduct regarding mortgage loans tied to two federally-backed loans she received. Amid these disputes, Powell could at least use the speech to direct criticism at the political disruptions, even if he adheres to the previous practice of not directly pointing fingers.