Fed chair Jerome Powell will speak at Jackson Hole today. Here's what to expect

The stock market is in the green, continuing the recovery after losses from the previous week. The boost is thanks to positive inflation news, consumer spending data, and strong economic reports that have eased recession fears. With that, all eyes are on the upcoming speech by Federal Reserve Chairman Jerome Powell on Friday at the annual Jackson Hole Economic Symposium, which could influence expectations for future rate cuts.

Here’s what you should know.

What’s going to happen at Jackson Hole?

This year’s Jackson Hole theme is “Reassessing the Effectiveness and Transmission of Monetary Policy.” Powell will speak Friday at 10 a.m. E.T. in front of central bankers, policymakers, and others, continuing the tradition of Fed chairs delivering keynote addresses. Typically, the event does not focus on announcing interest rates or policies. However, this year’s speech is significant as investors are anticipating a statement from the Fed Chair and hoping for valuable insights.

Analysts widely expect Powell to pave the way for a September rate cut. Recent inflation data, including the Consumer Price Index (CPI) and Producer Price Index (PPI), are slowing, while retail sales and employment data remain strong. Powell is likely to emphasize that inflation is trending in the right direction, boosting the Fed’s confidence in achieving its 2% target.

What the banking giants and experts are saying

Goldman Sachs GS-0.99% has outlined several key issues it hopes Powell will address during the conference. Foremost among these is a demonstration of confidence regarding inflation during the speech.

“We expect Powell to express a bit more confidence in the inflation outlook and to put a bit more emphasis on downside risks in the labor market than in his press conference after the July FOMC meeting, in light of the data released since then,” said David Mericle, Goldman Sachs GS-0.99% research’s chief U.S. Economist, in a recent report.

The current interest rate ranges between 5.25 and 5.5%. Since March 2022, the Fed has increased interest rates 11 times, and the current level has remained steady since July 2023.

Goldman Sachs GS-0.99% has projected a series of three consecutive 25 basis point rate cuts in September, November, and December, with additional quarterly reductions anticipated next year, aiming for a terminal rate between 3.25% and 3.5%. Morgan Stanley and the CME FedWatch Tool also anticipate a 25 basis point reduction in September.

While these rate cuts may not immediately alter Americans’ everyday lives, they offer critical insights into economic performance and the future direction of monetary policy. Such decisions have significant implications, impacting not only the U.S. economy but also global financial markets.