Federal Reserve Chairman Jerome Powell is speaking again.
Powell—who also made some introductory remarks at a separate event Wednesday morning that didn’t touch on Fed policy—is slated to appear on a panel titled, “Monetary Policy Challenges in a Global Economy” today.
The panel kicks off at 2 p.m. Eastern as part of the International Monetary Fund’s 24th Annual Jacques Polak Annual Research Conference. Joining Powell in the discussion are the IMF’s Gita Gopinath, Bank of Israel Governor Amir Yaron, and Kenneth Rogoff, chair of international economics at Harvard University. You can livestream the panel above.
It seems that every time Powell speaks these days, it’s a market event. There’s continued uncertainty around the Fed’s next move given softening economic momentum, tighter financial conditions, and easing (but not completely beaten) inflation.
That’s a problem, writes EY Chief Economist Gregory Daco.
“We continue to believe the Fed’s policy playbook needs a revision, especially in an erratic economic, financial, and geopolitical climate,” he wrote in a note Wednesday. “Navigating on a meeting-by-meeting basis without a compass and only yesterday’s news at hand is perilous. It’s imperative for policymakers to recalibrate and make their policy framework more prospective.”
During his press conference last week, Powell did everything possible to maintain policy optionality, but most Fed watchers and market participants believe the Fed’s tightening cycle is complete. Based on the CME FedWatch Tool, which tracks interest-rate futures, the odds of Fed officials holding rates steady next month currently stand at 90.5%.
The question on everyone’s mind now is when do the rate cuts start. Here, there’s a wider range of disagreement. EY’s Daco doesn’t foresee the Fed cutting interest rates before the middle of next year—likely kicking off in June and resulting in a gradual, 75 basis points worth of cuts. (100 basis points is one percentage point.)
Absent answers to that question, this week may be the relative calm between economic data drops that could shift attitudes around U.S. economic footing. Last week’s jobs report came in soft, but next week promises fresh inflation data via the Consumer Price Index and October retail sales.
Write to Megan Leonhardt at megan.leonhardt@barrons.com
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