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Bloomberg
an hour ago
- Business
- Bloomberg
Odd Lots: The KC Fed President on What Everyone Will Be Talking About at Jackson Hole
It's Jackson Hole time again, when the most prominent minds in monetary policy meet in an idyllic Wyoming setting for the Federal Reserve Bank of Kansas City's annual symposium on monetary policy. For markets, the main event tends to be the speech from the Fed Chairman. But beyond that, there's always a theme that central bankers and academics are tasked to discuss. So to raise the curtain for this year's event, we spoke with none other than Jeffrey Schmid, the president and CEO of the Kansas City Fed. We talked about the official theme of this year's conference, the growing political pressure on the Fed itself, and how he thinks about monetary policy at a time when markets are at record highs, the unemployment rate is low, and inflation continues to come in above target.
CBS News
3 hours ago
- Business
- CBS News
Fed Chair Jerome Powell faces delicate balancing act in Jackson Hole speech on Friday
When Federal Reserve Chairman Jerome Powell takes the stage Friday at the annual Jackson Hole, Wyoming, economic forum, he will face pressures ranging from President Trump's repeated calls for his resignation to a recent mix of worrying economic data. Powell, whose term as Fed chair ends in May of 2026, will likely be making his last major speech as the central bank's leader at the event, which is hosted by the Federal Reserve Bank of Kansas City. The symposium is closely watched by investors and economists because it provides a stage for Fed officials to share their views on the economy and the direction of monetary policy. A focal point in Jackson Hole will be if Powell offers any hints about the Fed's next interest-rate decision, scheduled for Sept. 17. Mr. Trump has badgered the Fed to cut rates, pointing to solid U.S. economic data and muted inflation. Powell has mostly shrugged off that pressure, emphasizing that the central bank is taking a "wait and see" approach as it monitors the potential impact of the Trump administration's tariffs on consumer prices. Yet Powell also faces a complicated economic picture, with recent signals pointing to a slowdown in job growth and one gauge of inflation registering its largest increase in three years. "You have this political pressure balanced off against the economic pressure, which makes Powell's job particularly difficult, and it's driving a hyper-focus on what he might say on Friday," Melissa Brown, managing director of investment decision research at SimCorp, told CBS MoneyWatch. The Federal Reserve declined to comment ahead of Powell's speech at the Jackson Hole symposium, whose theme this year is "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy." The Kansas City Fed will broadcast Powell's speech on its YouTube channel on Friday at 10 a.m. Eastern Time. While Powell is likely to discuss economic trends in Jackson Hole, he is virtually certain to demur on the question of when the Federal Open Market Committee, the central bank's 12-person interest rate-setting panel, might choose to lower its benchmark rate. That is by design. Fed officials famously keep monetary policy decisions — which are set deliberatively and by consensus — private before they are officially announced to avoid roiling financial markets and to insulate the central bank from political pressure. Meanwhile, policy makers will have a chance to assess several major pieces of economic data before their Sept. 16-17 meeting, including the Labor Department's monthly jobs report on Sept. 5 and the Consumer Price Index on Sept. 11. The head of the labor statistics bureau was fired in August after the agency's latest employment figures showed a sharp slowdown in job-creation, prompting Mr. Trump to question the accuracy of the data. For now, the August payrolls and CPI reports remain on the Labor Department's calendar of scheduled releases. "I don't think Powell can push the narrative toward cutting because that leaves him no option but to cut," said Mike Sanders, head of fixed income at investment management firm Madison Investments. "He has to signal, 'We're still data-dependent and we'll see what the data tells us'" so the Fed doesn't get pushed into a corner, Sanders added. For their part, investors are clearly placing their bets on the Fed lowering rates in September for the first time since December 2024. Wall Street economists put the likelihood of a cut at 88%, according to financial data company FactSet, with most expecting a 0.25 percentage-point dip. At last year's Jackson Hole event, Powell signaled that interest-rate cuts were coming after the central bank had previously raised its benchmark rate to its highest level in 23 years in trying to extinguish inflation. The following month, the Fed announced a jumbo cut 0.50 percentage points in a move to boost economic growth. This year, Powell could similarly use his platform in Wyoming to indicate his openness to a rate cut, according to Will Denyer, chief U.S. economist at Gavekal Research. At the same time, the Fed is also "in a pickle," given troubling jobs data and signs that inflation could be creeping higher, he said in a report this week. That speaks to the Fed's so-called dual mandate, which is to both maximize employment and minimize inflation. Balancing those two goals can require different — and sometimes conflicting — policies, as lowering interest rates can boost job growth while causing inflation to tick higher, and vice versa. "Data alone suggests a rising risk of a stagflationary scenario, which is, you know, a Fed nightmare," Denyer said. "That puts them in a bind between their two mandates being in conflict." Minutes for the Fed's July 30 rate decision meeting, when the FOMC again chose to hold rates steady, show that some members "remained worried that supply-chain disruptions could cause inflation to remain stubbornly elevated," signaling that price increases remain top of mind, noted Oxford Economics chief U.S. economist Ryan Sweet in a report on Wednesday "The labor market will be the swing factor on whether the Fed cuts interest rates in September or not," he added.
Indian Express
9 hours ago
- Business
- Indian Express
Ahead of Fed Chair Powell's Jackson Hole speech, data suggests cracks in US economy
For three days starting Thursday, some of the biggest names in the world of finance and economics will gather in Wyoming, US for the most hotly-watched central banking conference. Organised by the Federal Reserve Bank of Kansas City, the Jackson Hole Economic Policy Symposium has become a crucial policy event ever since it was first held in 1978 in Kansas City. Interestingly, the theme of that edition — World Agricultural Trade: The Potential for Growth — remains as relevant as ever nearly 50 years later. This week, however, some of the world's most important central bankers, academics, government officials, and leaders from the financial industry will instead discuss 'Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.' The 2025 edition of the Jackson Hole meetings comes even as the American labour market data is facing a torrent of abuse — from the US government itself. On August 1, US President Donald Trump sacked Erika McEntarfer, the Commissioner of the Bureau of Labor Statistics (BLS), after the agency said that non-farm payrolls — or new jobs outside of agriculture — rose by just 73,000 in July, while the numbers for the previous two months were revised downwards by more than a quarter of a million to a mere 19,000 for May and 14,000 for June. Trump claimed the jobs numbers were being 'rigged' to make him and the Republican party 'look bad'. McEntarfer's successor EJ Antoni, meanwhile, has called for the suspension of the monthly jobs data until it is 'corrected'. Ironically, the bad jobs numbers is one of the reasons why markets are expecting the US Federal Reserve to cut interest rates by 25 basis points to 4-4.25 per cent next month — something Trump has been aggressively demanding for some time now. But for those who were waiting for the sky to fall on the US due to the Trump administration's tariff war, some other recent sets of numbers point to emerging cracks in the American economy. Tariff impact on prices The US Consumer Price Index (CPI) data for July, released on August 12, was largely in line with expectations, with retail prices rising 2.7 per cent year-on-year and 0.2 per cent month-on-month. Meanwhile, core CPI was up 3.1 per cent year-on-year and 0.3 per cent from June. According to Taimur Baig, DBS Bank's chief economist, should Fed officials 'remain focused on inflation, they will find areas to worry about', with the 'tariff playbook' of US firms involving squeezing of suppliers, taking a balance sheet hit, and passing on some of the tariff to consumers. While the first two are 'most visible now', Baig thinks the third 'is also materialising, in a protracted manner'. But two days later, BLS data showed that US wholesale prices rose much faster than expected, with the Producer Price Index (PPI) up 0.9 per cent — the largest month-on-month gain in three years. Compared to a year ago, the PPI in July was 3.3 per cent higher. With wholesale prices rising faster than their retail counterparts in July, the indications are that American importers are absorbing Trump's tariffs. At least for now. Sales and sentiment A day after the US PPI data was released, on August 15 the Commerce Department data showed retail sales rose 0.5 per cent month-on-month in July. However, the same day, the University of Michigan's keenly-eyed consumer survey showed sentiment in July fell for the first time since April, with the proportion of consumers expecting unemployment to worsen over the coming year at about 60 per cent — a 'reading last seen in the Great Recession'. But things are worse for the poorest Americans. On August 12, the Bank of America said its credit and debit card spending data for July showed expenditure was 'flat' among lower-income households from a year ago compared to a growth of 1 per cent and 1.8 per cent for middle- and higher-income households, respectively. These, and much more, will have the US Federal Reserve thinking, and all eyes will be on Chair Jerome Powell, who will speak at Jackson Hole on August 22. In the past, Fed officials have used the conference to hint at future moves. While a rate cut is expected in September, it may not be as large as the 50 bps the Trump administration wants. According to analysts at Japanese investment bank Nomura, Powell is expected to 'signal that policy easing is likely…without committing explicitly to a September rate cut or multiple rate cuts this year'. 'The current view among Fed members remains mixed, though more views are converging on a rate cut view following the poor July nonfarm payroll report. It is unlikely Powell will be as candid as he was last year. He may say that more policy easing is likely this year but not commit to a specific time,' ANZ economists said in a note on August 18.
Epoch Times
2 days ago
- Business
- Epoch Times
Fed's Powell to Take Center Stage for Final Time at Jackson Hole Retreat
Federal Reserve chair Jerome Powell will be under the spotlight when he delivers his final keynote address at this week's annual central bank retreat beginning on Aug. 21. More than 100 people, including central bankers, academics, and financial industry leaders, will converge on Jackson Hole, Wyoming, for the Federal Reserve Bank of Kansas City's 43rd Economic Policy Symposium from Aug. 21 to Aug. 23.
Yahoo
3 days ago
- Business
- Yahoo
Wall Street is banking that Powell will signal a rate cut at Jackson Hole—but the closer it gets, the less likely it looks
Markets had been nearly certain the Fed would cut rates in September, but fresh producer price data are weakening those odds ahead of Chair Jerome Powell's Jackson Hole speech. While investors still see an 85% chance of a cut, Bank of America now expects rates to hold, warning tariffs and sticky inflation could keep policy tighter for longer. Analysts will be eyeing the back end of this week for the market-moving news. Analysts have long priced in a number of cuts to the base rate in 2025. With just a handful of meetings left to go this year, September has been widely identified as the month when the interest rate will finally be reduced. Markets were hoping for a further signal of their estimations this week, at the Jackson Hole Symposium held by the Federal Reserve Bank of Kansas City. Jackson Hole has previously been the site of tidal changes in monetary policy, with spectators widely expecting Chairman Jerome Powell to keep up the tradition at the end of the week. But as the summit draws closer, the data is only shifting further away from a rate-cut scenario, and the likelihood of a lower cut is more tenuous. A week ago, the chance of a September cut was being priced in at more than 95% by the market. At the start of a week that might otherwise have firmed that belief, the odds are lower. According to CME's FedWatch, the chance of the base rate being lower by one click to between 4% and 4.25% now stands at a little under 85%, with a 15.2% chance of a hold. Markets are flat this morning as the events of late last week (namely, President Trump's meeting with Russia's President Vladimir Putin) didn't do enough to shift the dial on prospects for better or worse. Before the bell, the S&P 500 is down 0.3%, the Nasdaq down 0.4% and the Dow up a minor 0.08%. S&P futures are down 0.08%. In Europe the FTSE 100 is flat, Germany's DAX down 0.3% and the CAC down 0.6%. In Asia the Nikkei 225 is up 0.77%, the SSE up 0.85% and the Hang Song Index down 0.37%. Markets have good precedent to be looking toward the end of the week (the symposium is held from Thursday to Sunday) for the major economic headlines. As Deutsche Bank noted to clients this morning: 'The Fed Chair's speech at Jackson Hole has often been used to send important policy signals, and it was last year that Powell said the 'time has come for policy to adjust' before they then cut rates at the next meeting for the first time since the pandemic. This time around, we don't have the full agenda yet, but the subtitle for Powell's speech on the Fed's website says 'Economic Outlook and Framework Review', so we can expect some insight on those topics.' The notice of framework review is particularly of interest Henry Allen, a macro strategist at Deutsche, added in his note. The last time such a framework concluded was in 2020 and resulted in a shift toward average inflation targeting. Essentially, the Fed would look at periods where inflation had been persistently lower than 2% (across the span of the 2010s, for example) and would allow for policy which supported inflation above the 2% target to counteract the timing overall. 'The Fed also reinterpreted their approach to full employment, in that a tight labour market alone wasn't a reason to raise rates. So that implied a move away from the pre-emptive approach whereby the Fed would tighten policy to get ahead of future inflation as the labour market tightened,' Allen wrote. 'Of course, we now know that shortly after the framework review, there was then a major burst of inflation, and although it had many drivers, our U.S. economists concluded in a Friday note that the new framework was a contributor to that overshoot. 'So this time around, they expect Powell's speech to call for rolling back the 2020 modifications and restoring a primary role for pre-emption.' If the Fed does decide to take a longer-term view on inflation, those hoping for a cut may be disappointed. Since 2021, inflation has stayed persistently above the target of 2%, with analysts suggesting further pressures are coming down the pike courtesy of President Trump's tariff plan. A clear shift Not even a week ago, the likes of Treasury Secretary Scott Bessent were not only confident of a September cut but also questioned whether a larger cut could be justified. The pressure for a cut came from a shock jobs report from the Bureau of Labor Statistics, which revealed the employment market has been in far worse shape this summer than previously expected. The market's surety of a cut grew as a result, expecting the Federal Open Market Committee (FOMC) to rush to the aid of the maximum employment side of its dual mandate. A better-than-expected consumer inflation report added to confidences—though most conveniently overlooked the fact core inflation has now inched over 3%. However, July's Producer Price Index (PPI) poured a little cold water on the excitement, showing the fastest increase since March 2022 and hinting that while tariff pass-through hasn't yet fully hit consumers, it's bleeding into the domestic economy. Indeed, the data has been enough to push Bank of America to side with the minority: That Powell will announce no change to the base rate next month. Global economists Claudio Irigoyen and Antonio Gabriel wrote Friday: 'With inflation essentially stuck over the past year, the tariff passthrough that we still expect, and the labor supply story keeping the unemployment rate historically low, we still think there is a strong case for the Fed to remain on hold. We will see next week if Powell holds the line or not, and then focus will shift to the next jobs report.' Here's a snapshot of the action prior to the opening bell in New York: S&P 500 futures were flat Monday morning. STOXX Europe 600 was down 0.1% early trading. The U.K.'s FTSE 100 was down 0.1% early trading. Japan's Nikkei 225 was up 0.77%. China's CSI 300 was up 0.88%. India's Nifty 50 was up 1%. Bitcoin declined to $115.180K. This story was originally featured on
