The biggest development this week will undoubtedly be the speech by FED Chairman Jerome Powell at the Jackson Hole Symposium in the US state of Wyoming. This event is considered one of the most important economic events of the year.
What Will FED Chair Powell Say?
While it is almost certain in the market that the FED will cut interest rates in September, experts say that the real question is no longer whether the FED will cut interest rates or not, but whether it will cut rates by 25 or 50 basis points in September. Analysts note that Jerome Powell is likely to confirm that a rate cut will occur but will not elaborate on the exact size of the cut. According to Bloomberg US Chief Economist Anna Wong, Powell is expected to emphasize that rate hikes have already had the desired results and that rates are restrictive enough.
Opinions of FED Members
Kansas City FED President Jeff Schmid emphasized that inflation should be brought down to a sustainable level of 2 percent. Boston Fed President Susan Collins stated that there should be more confidence that inflation will return to 2 percent and that the time to lower interest rates is approaching. Philadelphia FED President Patrick Harker also said that if the data follows their expectations, a rate cut in September is possible. According to CME FedWatch, the probability of a 25 basis point rate cut in September is priced at 73.5 percent, and the probability of a 50 basis point cut is priced at 26.5 percent.
Market Expectations
Expectations in financial markets indicate that the FED may cut rates by 100 basis points by the end of the year. Jerome Powell's statements at the symposium could cause market fluctuations. This underscores the importance of his speech, scheduled for 17:00 Turkey time.
Jerome Powell's speech at the Jackson Hole symposium will attract market attention and could significantly impact interest rate dynamics and economic expectations.
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