Powell Leads Week of Decisions Amid Inflation Pressures

SadaNews - An eventful week awaits the U.S. Federal Reserve and followers of central banks. The annual economic policy seminar organized by the Federal Reserve Bank of Kansas City kicks off on Thursday evening in "Jackson Hole," Wyoming.

Chair Jerome Powell is expected to unveil the new monetary policy framework in a speech on Friday, which will outline the strategy the Fed will pursue to achieve its goals related to inflation and employment.

Will the Fed Cut Interest Rates in September?

Powell may also hint at the thoughts of monetary policy officials at the Federal Reserve ahead of the scheduled meeting in September. The central bank has kept interest rates unchanged since the beginning of the year, awaiting clarity on the effects of the tariffs imposed by President Donald Trump’s administration on the economy.

With inflation remaining above the Fed's 2% target and signs of a slowing labor market emerging, monetary policymakers are divided on the right timing to resume interest rate cuts. Powell's speech may provide observers of the Fed with a new indication of support for a rate cut in September, as the Trump administration intensifies its calls for easing.

Economic data released last week did not provide much clarity regarding inflation and the economy. The core Consumer Price Index, which excludes food and energy, rose in July at the fastest pace since the beginning of the year. However, tariffs on goods did not lead to the level of cost increases that had been feared.

Yet, a separate report on wholesale price inflation indicated growing pressures on businesses. A new report on retail sales showed that American consumers displayed greater strength over the past two months, although declining confidence reflects concerns about inflation and the labor market.

Independence of Central Banks

The global nature of the "Jackson Hole" conference also provides an opportunity for Powell's counterparts to express their support amid repeated criticisms from President Donald Trump. The independence of central banks is likely to be a key topic of side discussions at the meeting.

The Federal Reserve's Independence Awaits Execution of a Sentence

Several economists will present new research papers during the conference, which usually features a discussion session involving heads of some of the world's largest central banks.

On another note, monetary policymakers in New Zealand are expected to cut interest rates in an effort to support the labor market. In the United Kingdom, inflation and retail sales data are at the forefront, while purchasing managers' indices for several economies around the world help shed light on the repercussions of U.S. tariffs.