JACKSON HOLE, Wyo. — When Federal Reserve Chair Jerome Powell gives his last speech in Jackson Hole, Wyo., on Friday, investors will be listening for whether he signals an interest rate cut is coming next month.
But Powell’s outline of two bigger questions facing the Fed will shape the future of the central bank in ways that will outlast his tenure and mark a key part of his legacy as chair.
Powell’s widely anticipated speech will be delivered as the debate over the state of the economy, and the possibility of rate cuts, heats up.
In interviews with Yahoo Finance on Thursday, Kansas City Fed president Jeffrey Schmid and Cleveland Fed president Beth Hammack both offered some caution on the need for interest rate cuts as soon as next month, given recent inflation data.
“There’s a lot of data we’re going to get between now and September, and I walk into every meeting with an open mind about what the right thing to do is,” Hammack said. “But with the data I have right now, and with the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates.”
Schmid and Hammack’s colleagues at the Federal Reserve Board, Michelle Bowman and Chris Waller, have been among those more vocal about the need for rate cuts. Investors were assigning roughly 75% odds on a 0.25% cut from the Fed on Sept. 17 as of Thursday afternoon.
Disagreement over the Fed’s next move, however, is only a small part of the backdrop against which Powell is set to speak.
Most notable is pressure from President Trump, who this week called for Federal Reserve governor Lisa Cook to resign amid a controversy over two mortgage loans. The Financial Times reported Thursday that the Department of Justice sent Powell a letter calling on the Fed chair to remove Cook from her post.
Controversy at Jackson Hole: Board of Governors of the Federal Reserve member Lisa Cook, who is under fire from President Trump for two mortgage loans she took out before she joined the Fed. (AP Photo/Manuel Balce Ceneta, File) · ASSOCIATED PRESS
Trump, who refers to Powell as “Too Late” for not cutting rates earlier this year, has regularly commented on Fed policy and said interest rates should be much lower than the current benchmark range of 4.25%-4.50%. Treasury Secretary Scott Bessent has also weighed in on monetary policy, saying in an interview earlier this month the Fed ought to consider cutting rates by 0.50% in September.
“I think that having an independent central bank has been an institutional arrangement that has served the public well,” Powell said last month. “And as long as it serves the public well, it should continue and be respected.”
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Powell is also expected to lay out changes to the central bank’s policy framework review, which articulates the Fed’s strategy and commitment to fulfilling its congressional mandate for stable prices and maximum employment.
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