JACKSON HOLE, Wyo.–Credit unions will be among those who will be eagerly watching Jackson Hole, Wyo. this week as the Federal Reserve hosts its annual policy symposium as it could signal its intentions for setting rates during the rest of the year. It’s also likely the Fed will be looking for signals itself.
Making it all the more challenging for the Fed is the fact it is meeting a week after consumer and wholesale price data sent mixed messages over how well is the economy doing.
Chairman Jerome Powell is scheduled to speak on Friday.
Expectations have increased that the Federal Reserve will cut rates in September, which has sent the stock market soaring even as inflation remains above the Fed’s 2% target.
The CU View
Dawit Kebede, chief economist with America’s Credit Unions, is among those who expect the Fed to reduce rates.
“July prices increased in line with expectations, with items most likely to be impacted by tariffs either rising at a slower rate or remaining flat compared to June’s print,” said Kebede said. “Core prices increased primarily due to services such as transportation and medical care. Given the weakening labor market and restrictive monetary policy, the Federal Reserve will most likely cut rates in September. Markets are already pricing in a higher probability of this move.”
The futures market has signaled it expects the Federal Open Market Committee to cut rates by a quarter of a percentage point at least twice more this year.
President Donald Trump has been publicly pressuring the Fed to more aggressively reduce rates.
A ‘Fine Line’
Ashwin Alankar, head of global asset allocation at Janus Henderson, told Reuters, “To keep markets calm, Powell will have to walk a fine line and underscore the Goldilocks conviction held by many investors that the economy is neither overheating nor at risk of tipping into a recession…He can’t scare the market by saying the Fed believes the economy really needs a lot of stimulus.”
Jeff Blazek, co-chief investment officer, multi-asset, at Neuberger Berman, told Reuters, the biggest risk of all may be the market’s recent euphoria, which has defied a litany of bad news and left April’s tariff-driven nosedive in the rear-view mirror.
“Going into this event, the more smug we feel … the greater the risk of a market-moving reaction,” Sosnick told Reuters.
