Fed’s Powell, Under Pressure, Likely To Stick To ‘Mid-Cycle’ Message

www.oann.com | 11/2/2017 | Staff
iVchaniVchan (Posted by) Level 3
JACKSON HOLE, Wyo. (Reuters) – Federal Reserve Chair Jerome Powell comes to this year’s meeting of central bankers in Jackson Hole, Wyoming, caught between discord within the U.S. central bank over appropriate monetary policy and mounting outside pressure for more interest rate cuts.

In navigating that divide, Powell is unlikely to use his keynote speech on Friday at the Kansas City Fed’s annual economic symposium to veer much from the message he sent last month after the Fed cut rates for the first time in a decade: That the move was a “mid-cycle adjustment” and not the start of a rate-cutting cycle.

Possibility - Trade - Tensions - July - Policy

He will likely nod to the possibility that trade tensions, which have escalated since the July 30-31 policy meeting, may worsen a global economic slowdown and ultimately make more U.S. rate cuts necessary.

But he is expected also to try to ensure he is not seen as bowing before repeated attacks from President Donald Trump for not easing policy further, or caving to a bond market where investors appear to be heavily betting the policy-setting Federal Open Market Committee will end up doing so.

Year - Jackson - Hole - Shift - Policy

“We cannot rule out this year’s Jackson Hole being another fundamental shift in policy as it has been in years past,” UBS economists wrote in a note earlier this week. “But more likely, Powell will give another speech on risk management to try to lean dovish without committing to bold actions that the committee may not ratify.”

Since last August’s annual central bank gathering in Grand Teton National Park, Powell has faced an increasingly difficult terrain both politically and economically.

Trump - Criticism - Fed - Powell - President

Trump has steadily ratcheted up his criticism of the Fed and Powell, who was handpicked by the president in late 2017 to head the central bank.

Last week, Trump called Powell “clueless” and urged the Fed to reduce borrowing costs by...
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