Powell's Speech Tonight Highlights Preview: Can the Overture of Policy Shift be Played, Market Awaits Clear Rate Cut Signal
BlockBeats News, August 22: Federal Reserve Chairman Powell is scheduled to speak at the Kansas City Fed's annual central bank symposium in Jackson Hole tonight at 10 p.m. Beijing time. The market expects the following key points from his speech:
Rate Cut Path: Will Powell confirm whether the expected rate cut next month is the focus of this speech? Currently, most institutions expect Powell to take a neutral stance, not providing clear signals and continuing to emphasize a data-dependent decision-making approach. However, the market remains concerned about his pushback against the rate cut expected in September;
Policy Framework Review: The Fed's policy framework review has become one of Powell's key focus areas for this speech. Several major investment banks expect Powell to possibly downplay the Flexible Average Inflation Targeting (FAIT) introduced in 2020, returning to a more traditional policy statement emphasizing a more balanced approach to employment and inflation targets;
Inflation Concerns: Powell may acknowledge a slight easing in the CPI but still above target, and address concerns about the surge in the PPI. He will continue to point out the need to be vigilant regarding service sector inflation stickiness and potential pressures from tariffs, emphasizing the importance of anchoring inflation expectations;
Labor Market: Powell may respond to the cooling of non-farm data and significant downward revisions, and may acknowledge a softening labor market and reduced potential for job growth, but may play down the impact of a single labor data point, emphasizing the need to make comprehensive judgments based on multiple indicators;
Political Pressure: Powell will likely avoid discussing the political pressure he faces during the speech, stating that he will focus on doing his job well. Trump has publicly criticized Powell multiple times, and government officials have been pressuring the Fed continuously, recently even demanding the immediate dismissal of Fed Governor Lael Brainard. (Jinshi)
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