Investors are warning that markets could experience sharp fluctuations as they await Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole. Powell must strike a delicate balance between curbing inflation and supporting employment.
Wall Street expects Powell to signal monetary policy easing. However, Powell may be cautious as Trump’s tariffs could increase price pressure again.
Furthermore, pressure from the Trump administration to lower interest rates is turning Powell’s recent speech into a test of the Fed’s independence.The weak employment report in July and subsequent revisions had strengthened expectations of interest rate cuts this year. However, the rise in producer prices reduced the likelihood of a large-scale cut in September, leading markets towards two smaller rate cuts.
Analysts say Powell will likely avoid giving a clear roadmap, which could create volatility in stock and bond yields.
Market reactions may be more severe, especially during the summer months, due to weak liquidity.Experts agree clearly: “Volatility is inevitable.”
