The Jackson Hole Global Central Bank Annual Meeting will be held from the 22nd to the 24th. The world is paying close attention to the speech of U.S. Federal Reserve Chairman Jerome Powell on the 23rd. He is expected to deliver a speech at 10 a.m. Eastern Time on Friday (10 p.m. Taiwan time). . With the U.S. non-farm payrolls revised sharply and the July Federal Reserve meeting minutes showing that most officials support a September interest rate cut, Powell is expected to strike a dovish tone.
Evercore ISI recently predicted that Ball will hint at a flexible approach to interest rate cuts. Although a 1-yard rate cut in September is the basic step, he is open to a 2-yard rate cut. Before Ball’s speech, two Fed officials On the 22nd, he released a dovish message, believing that the Federal Reserve should start cutting interest rates as soon as possible, but the pace of interest rate cuts should be gradual and orderly.
Interest rate cuts should be gradual
Boston Fed President Susan Collins said in an interview that she is confident the Fed can reduce inflation without triggering a recession, and signaled support for cutting interest rates starting next month:
I think there is a clear path to achieving our goals without an unnecessary recession and with a continued healthy labor market. The importance of maintaining a healthy labor market while we continue to lower inflation is one of the reasons why I think the time seems right to begin easing monetary policy.
However, Susan Collins would not comment on the possibility that the Fed would cut interest rates by 2 points instead of the usual 1 point to start the easing cycle. However, she emphasized the health of the labor market and called for a "gradual and orderly" easing cycle. The way to adjust policy suggests that she is leaning towards a smaller rate cut.
Susan Collins mentioned that one of the risks to the economic outlook is that if people think that the U.S. labor market is cooling too quickly, the economy may slip into a self-fulfilling weakness, but importantly, the current series of data shows that the labor market is generally healthy. .
Philadelphia Fed President Patrick Harker also said that he supports starting to cut interest rates in September and lowering interest rates in an orderly manner, but he also added that he hopes to get more information before deciding to cut interest rates by 1 or 2 next month. Lots of information.
However, the host of the global central bank annual meeting, Kansas Fed President Jeffrey Schmid, was more cautious. He said:
It makes sense to me to take a hard look at some of the data over the next few weeks and before we take action, at least before I take action or recommend action, I think there's a little bit more data to look at.
The chance of losing 1 size in September rises to over 70%
According to the latest forecast from the Fed Watch tool, market expectations for a 1-cent rate cut in September have increased significantly. The market currently believes that the probability of the Fed cutting interest rates by 1-digit rate in September is 73.5%, which is much higher than the 65.5% reported by the Fed yesterday. The probability of a two-digit rate cut is 73.5%. then dropped to 26.5%,
