Before Jackson Hole, there is speculation about whether the Fed will lower by 0.25 or 0.50 percentage points in the next announcement, scheduled for September 18. Some analysts have even called for an extraordinary interest rate meeting in the Fed's board, so that the cuts do not start too late.
Will likely hold back on the pace
Unexpectedly weak job figures and an inflation rate approaching the target in the US are behind this.
Powell will try to take the edge off speculation about a hard landing for the US economy, says Robert Bergqvist, senior analyst at SEB, ahead of the Jackson Hole speech.
The direction is clear. Now they are on their way to lowering the interest rate. Then, as a central bank, you will likely want to hold back a bit on the pace, he adds.
Bergqvist does not believe that the fact that there is a presidential election in the US on November 5 will affect the Fed's monetary policy maneuvering room.
No, with exclamation marks, he says.
Presidential candidate Donald Trump's statements about the Fed's independence and that he has made it clear that he does not want to see any interest rate cuts before the election will rather lead to the Fed's board emphasizing that it is growth and inflation that determine where the interest rate should be, according to Bergqvist.
I don't think it will play any role at all before the election. Then we'll see what happens if Trump wins the election.
Can halve the interest rate pressure
The symposium in Jackson Hole takes place with an American key interest rate of 5.25-5.50 percent, the highest level in over 20 years. Bergqvist expects the Fed to be able to halve the interest rate pressure in the slightly longer term, to what is described as a "neutral interest rate" somewhere around 2.50-3.00 percent.
Normally, when the Fed starts an interest rate cutting cycle, they have lowered by around 2 percentage points within a year, he says.
Joakim Goksör/TT
Facts: Central bank elite gathers in Jackson Hole
TT
Over the weekend, the world's leading central bankers, economic decision-makers, and a number of leading academics in economics gather for the annual symposium in Jackson Hole, Wyoming, USA.
Speculation about rapid interest rate cuts has intensified this summer since inflation has fallen towards the target of around 2 percent, while unemployment has risen to its highest level since 2021.
In Jackson Hole, among others, US Federal Reserve Chairman Jerome Powell will speak on Friday. Also speaking are the British central bank chief Andrew Bailey and Philip Lane, chief economist at the European Central Bank (ECB).
Riksbank Governor Erik Thedéen is also participating in the symposium, which begins days after what is expected to be a 0.25 percentage point cut in the Swedish key interest rate to 3.50 percent on Tuesday.
