Fed Chairman Jerome Powell faces the tough challenge of presenting a unified voice on Fed policy from the most divided Fed in years.
Fed Chairman Jerome Powell faces the tough task of convincing the markets that the Fed is willing to continue to cut interest rates if needed, contrary to the view of some Fed officials.
As of Thursday morning, fed funds futures were pricing in more than 90% odds for a 25 basis point rate cut at the September meeting, and between one and two further quarter point cuts between then and the end of the year. Adding to the negative sentiment on Thursday was a report that showed the manufacturing sector contracting for the first time in the U.S. since the financial crisis. The"The rest of the world looks shaky. If we do nothing, the dollar will likely appreciate and we will import tightening," said Gapen.
Powell has said the Fed would act as appropriate in the face of global weakness, concerns about the trade war and stubbornly low inflation, ahead of the Fed's quarter point rate cut in July. But his comments after the July meeting that the Fed was making a "midcycle adjustment" or an insurance cut to head off weakness, shook up markets that have been looking for a more aggressive Fed rate cutting cycle.
Powell should mention "the business sector; the risk management perspective given the global outlook and the outlook for inflation, and talk about how they're still watchful of the risks and they will respond as needed," Briggs said.
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