The Latest on the gathering of central bankers in Jackson Hole, Wyoming (all times local):
David Jones, a leading historian of the Federal Reserve, says he thinks President Donald Trump’s reference Friday to Fed Chairman Jerome Powell as an “enemy” set an unfortunate precedent.
“This challenges something that has been sacred in the history of the world’s most successful central bank,” said Jones, an economist an author of four books on the Fed. “The central banks that have been successful are those which are independent of political pressures and were free to make the appropriate monetary policy.”
On Twitter Friday, Trump tweeted:
“As usual, the Fed did NOTHING!”
“My only question is,” he added, “who is our bigger enemy, Jay Powell or Chairman Xi?,” referring to China’s President Xi Jinping.
Some economists saw Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole as setting the stage for further interest rate cuts this year. A quarter-point rate cut reduction in September is considered all but certain. Some think the Fed will cut rates again in December.
Paul Ashworth, chief U.S. economist at Capital Economics notes that Powell “warned that the downside risks have intensified in the three weeks since the July (Fed) meeting.”
Brian Bethune, economics lecturer at Tufts University, says, “We are looking for at least one rate cut in September, and the possibility of an additional rate cut in the fall is greater than 50%.”
Reacting to Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming, President Donald Trump, who has relentlessly attacked Powell and the Fed for its rate policies, kept up his verbal assaults on Twitter:
“As usual, the Fed did NOTHING!” Trump tweeted. “It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the U.S. will do great.”
“My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?”
In the wake of Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming, some analysts still foresee the likelihood of further interest rate cuts.
“I still think the Fed will cut the interest rate in September as an insurance policy,” says Sung Won Sohn, business economist at Loyola Marymount University in Los Angeles. “The cost of an economic recession is very high and painful so the Fed wants to do something in advance” to prevent an economic downturn.
Sohn suggests that the Fed will feel the need to act because of rising threats from the trade war and the global slowdown and because it won’t want to wait for those threats to worsen.
Federal Reserve Chairman Jerome Powell says President Donald Trump’s trade wars have complicated the Fed’s ability to set interest rate policies but offers no clear signal about further interest rate cuts.
Speaking to a Fed policy conference in Jackson Hole, Wyoming, Powell points to increasing evidence of a global economic slowdown and suggests that uncertainty from Trump’s trade wars has contributed to it.
He says the outlook for the U.S. economy remains favorable but that it continues to face risks. Powell reiterates that the Fed “will act as appropriate to sustain the expansion.”
The Fed cut rates last month for the first time in a decade, and financial markets have baked in the likelihood of further rate cuts this year.
Global stock markets are up ahead of a closely watched speech by the U.S. Federal Reserve chairman.
Market benchmarks in London, Frankfurt, Shanghai and Tokyo are all higher on Friday. Futures for the Dow and the S&P 500 are up 0.2% and 0.3%, respectively.
Investors are looking to Jerome Powell’s speech Friday for signs of direction on interest rates after two regional Fed presidents said they see no need for a change.
Investors expect a cut in September, the Fed’s second in three months, to shore up U.S. economic growth amid a tariff war with Beijing and weakening global growth.
“Markets seem very clearly positioned for some very dovish guidance from Mr. Powell,” Jeffrey Halley of Oanda said in a report. “It is a dangerous assumption to make.”
Against the backdrop of a vulnerable economy, Federal Reserve Chairman Jerome Powell takes center stage Friday with the financial world seeking clarity on whether last month’s first Fed rate cut in a decade likely marked the start of a period of easier credit.
The confusion has only heightened in the days leading to the annual gathering of global central bankers in Jackson Hole, Wyoming, at which Powell will give the keynote address.
Investors are looking for a clearer signal from Powell that he and other members of the Fed’s interest rate committee support further rate cuts to counter a slowing global economy and calm turbulent markets.