Jackson Hole, the magical place where monetary policy meets cowboy boots, log cabins, and horse whisperers.
Driving the news: U.S. Federal Reserve Chair Jerome Powell — a.k.a. the Taylor Swift of economic symposiums — will be giving his much-anticipated keynote speech this morning, an address that will be scoured for hints about a potential interest rate cut next month.
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Most U.S. policymakers are now expecting a rate cut in September. It would be the first interest rate cut the Fed has made since March of 2020.
- Fed officials have been wary of cutting rates too early and losing progress on inflation.
Why it matters: After central banks raised interest rates to historic highs last year, the world’s biggest economy declaring that it's got inflation under control would be a major milestone.
- For Canada, a U.S. rate cut would also be welcome news. Bringing the interest rate paths of the Fed and the BoC closer together would be a win for the loonie.
Bottom line: The question of a rate cut has largely shifted from if to how big. Some experts say that with the U.S. unemployment rate hitting an almost three-year high in July, a 50-point cut isn’t out of the question.—LA