The Fed chair, Jerome Powell, could seriously disappoint Wall Street in Jackson Hole

The annual event previously served as a occasion for political decision -makers to tease up to come. Last year, Powell reported a pivot on the cuts, saying that “the time has come for a policy to adapt” and that “my confidence has increased that inflation is on a sustainable 2%path”.

Wall Street is massively expecting the Fed to take up prices in September, after having retained for months when President Donald Trump’s prices have repercussions in the economy. It is like Trump and the White House exerted immense pressure on the Fed to facilitate ease while a more dominant governor was appointed to the Council of Governors.

But Powell may not drop big advice this year.

On the one hand, some analysts do not think that a drop in September rate is in the bag because inflation remains greater than the 2% target of the Fed and runs more as prices exert upwards on prices.

Meanwhile, economists are wondering if the deterioration of job data is due to a low demand for workers or a low offer. If the problem is the offer, the rate decreases would aggravate inflation.

“Prices are nourished unevenly and will continue to push higher inflation in the coming months,” American deputy economist in Oxford Economics, in a note on Friday. “It will be difficult for political decision -makers to unravel the punctual tariff effects from sustainable inflationary pressures.”

For the moment, he thinks that the Fed will remain pending until December, but a weak report of August jobs would change its point of view.

The market veteran, Ed Yardeni, has maintained a forecast “none and compensation” for this year, claiming that the Fed will retain reductions due to the elected inflation and the continuous resilience of the American economy.

As for the speech of Jackson Hole, a note from Mardeni Research on Sunday predicted that Powell would keep his cards near his vest.

“There is a good chance that he will no longer be an owl – wait and watch – only a hawk or a dove,” he said. “In other words, he will say that a drop in rate of the Fed is possible at the September meeting, but Fed decisions depend on data.”

Bank of America was also skeptical about the rate reductions this year and stressed that Powell suggested in July that it would be comfortable with low job gains as long as the unemployment rate remains in a tight range.

This scenario now seems to become reality, and Bofa said that Jackson Hole’s speech by Powell will give him a chance to “do the conversation”.

“If Powell wants to rely against a September Cup, he could say that the political position remains appropriate given the data at hand. We note that this phrasing would allow him to keep the optionality of the Cup if the August employment report is very low,” the bank said in a note on Wednesday. “Of course, he could also telegraph a cup by saying that it is appropriate to move on to a less restrictive policy position.”

Wall Street played so much in a September drop that any sign that investors may have to wait longer would not only be a serious disappointment – it would look like an increase in rates.

Preston Caldwell, chief economist of the United States in Morningstar, wrote on Tuesday that, given the duration of the market while waiting for a reduction, “the postponement of the cuts much further would be an effective tightening of monetary policy at this stage.”

“ We do not think that Powell can guide firmly towards relaxation ”

But even some economists who think the Fed will cut next month is doubtful that Powell is looking at his hand on Friday.

JPMorgan said that Fed’s double mandate tension between the fight against inflation and the maximization of employment now promotes the latter.

Despite recent inflation data indicating that prices filled prices more, the disappointing report of jobs should tilt the Fed to reduce rates next month.

“However, with several Fed speakers recently declaring that the case for a cup has not been made, and with more data on future employment, we do not think that Powell can firmly guide towards the flexibility at the next meeting,” said JPMorgan in a note on Friday.

The United States economist, US economist from Citi, thinks Powell will turn on a cup, but will not go beyond.

The index could take the form of a remark that the risks to employment and inflation are in balance. In July, Powell said if they were in balance, rates should be more neutral. Since he described the current level of “modestly restrictive” rate, this suggests that balanced risks deserve a reduction.

Since then, employment data have shown that the labor market has softened, allowing Powell to say that the risks are more balanced and that the rate reductions would be appropriate next month if this trend continues, Hollenhorst wrote in a note on Friday.

“We expect President Powell to confirm the market prices for pricing yields in September, but do not explicitly commit to reducing this meeting,” he said. “We do not expect it to get the cutting size, but it is sure to suppose that the basic case right now is for a cup of 25 pb.”