Economy News: Jackson Hole Policy Meeting
The world’s most powerful central bankers meet this Thursday for a two-day long policy conference in Jackson Hole, Wyoming.
The White House is ratcheting up pressure on Federal Reserve Chairman Jerome Powell going into the meeting.
Last week, White House hardliner Peter Navarro called out the Fed for raising rates “too far, too fast” and President Trump has frequently called out Powell for “holding us back”.
Trump’s latest round of tariffs put Powell in an even tougher position.
If seen through to completion, tariffs of 10% on all Chinese goods could have a significant impact on the economy.
Fed Under Pressure to Lower Rates
As a result, The Fed, conceived as a politically neutral institution, seems obligated to take action to protect the economy against potential tariff impact.
The Fed is trying to keep U.S. businesses competitive and simultaneously maintain its position as a global policy leader.
It’s a difficult balancing act, but Powell is doing his best to toe the line.
Washington and Wall Street are pushing for lower rates, but negative-yielding U.S. bonds create a scary scenario for global economic stability.
Lower rates give the Fed less ammunition to combat an economic slowdown, which some experts say is imminent, and threatens U.S. Treasury bonds’ status as the preeminent destination for global capital.
What To Watch: Jackson Hole
Powell’s comments around the meeting will set the stage for markets in the coming months.
If Trump doesn’t like what he hears, expect China tariffs to come back into play.
Should this scenario come to fruition, it could result in another roller coaster ride for traders.
Trump wants rate cuts and he’s willing to take drastic action to force Powell’s hand.
That being said, Powell is expected to take a dovish stance at Jackson Hole. Many expect he will use the meeting as a pulpit to prepare the market for more cuts.
Either way, expect Powell’s commentary to create volatility in stocks.
Stay tuned to Stock Dork News for the latest economy news and in-depth coverage of the Jackson Hole conference.