Eyes were fixed on the Jackson Hole Symposium on Friday as Federal Reserve chair Jerome Powell readied to deliver a keynote speech on Friday
Given widespread anticipation for the US central bank to begin cutting interest rates over the coming months, any clues on the depth of these were awaited.
Swissquote Bank Ipek Ozkardeskaya noted the “absence of a severe economic slowdown” meant Powell would likely hint towards gradual cuts.
“This is at least what the data suggests and what other Fed members nudge toward as well,” she said.
Markets were anticipating 95 basis points worth of cuts over the remainder of 2024 ahead of the speech.
This would include the first at the Fed’s next meeting in September, with a steeper 50 basis point cut expected at least once.
Rates were held by the Federal Reserve in its last call, marking a divergence between central bankers globally as the Bank of England cut but the Bank of Japan raised.
AJ Bell analysts previously noted this left central bankers at “centre stage for reasons with which they may not feel entirely comfortable”.
Following poor US job market data earlier this month, which sent global stocks into freefall on fears the world’s largest economy was heading for recession, AJ Bell added attention was now on the Federal Reserve and its own hopes for a soft landing.
“The US Federal Reserve is facing more questions about the risk of policy error and whether it is squeezing too tightly,” analysts said.
Powell will speak at 10am Eastern Time, or 3pm in the UK.