Federal Reserve Chair Jerome Powell is set to address the annual Jackson Hole economic conference on Friday, amid intense pressure from President Donald Trump to lower interest rates.
Trump has escalated his campaign, recently calling for Fed Governor Lisa Cook’s resignation over unverified allegations.
The Fed has held rates steady at 4.25% to 4.5% for eight months, following sharp increases to combat pandemic-era inflation.
Powell’s speech, his first public remarks since a weak jobs report on August 1, is expected to clarify the Fed’s stance on balancing inflation and employment concerns.
Recent data presents a complex picture for the Fed.
Hiring has slowed significantly, raising concerns about weakening employment, a core part of the Fed’s mission.
Concurrently, inflation remains above the 2% target, with Trump’s tariffs expected to push prices higher.
Raising rates to curb tariff-induced inflation could risk a recession, while lowering them might fuel spending and worsen inflation.
Kansas City Fed President Jeffrey Schmid emphasized caution, noting that lowering rates now could undermine the Fed’s credibility in controlling inflation.
Trump’s push for rate cuts, including a suggestion to slash rates to 1%, contrasts with the Fed’s data-driven approach.
Powell has defended the central bank’s independence, stressing decisions based on economic data, not political factors.
The Jackson Hole speech may also unveil a streamlined Fed operating framework, marking Powell’s final address at the event before his term ends in May 2026.
Investors anticipate a possible quarter-point rate cut in September, with futures markets indicating a 75% likelihood, though mixed signals leave the Fed’s next move uncertain.