How fast will interest rates fall? Fed Chair Powell may provide clues in high-profile speech

JACKSON HOLE, Wyoming (AP) — With the Federal Reserve considered certain to start cutting its benchmark interest rate next month, Chair Jerome Powell’s highly anticipated speech Friday morning at an economic conference will be closely watched for any hints about how many additional rate cuts might be in the pipeline.

Powell is expected to say the Fed has become more confident that inflation is nearing its 2% target, more than two years after it hit a painful four-decade high. Yet the Fed chair may take an overall cautious approach in his remarks at an annual conference of central bankers in Jackson Hole, Wyoming. Economists note that forthcoming economic data, including a monthly jobs report on Sept. 6, will help determine the size of future Fed rate cuts — whether a typical quarter-point cut or a more aggressive half-point drop — and how fast they occur.

“We think he will seek to dampen expectations of (a half-point cut) as well as reiterate that the Fed is data-dependent and does not make decisions in advance,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note.

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