For months, the Federal Reserve chair, Jerome Powell, has ignored demands from Donald Trump to cut interest rates and defied the US president’s calls to resign.
On Friday, as Trump ramps up his extraordinary attack on the central bank’s independence, Powell will set out where he thinks the world’s largest economy is headed in a closely scrutinized speech at the Jackson Hole symposium in Wyoming.
As Trump’s erratic trade strategy continues to enshroud the US economy in a fog of uncertainty, investors, economists and officials hope Powell will provide hints of the Fed’s plans for the months ahead.
At five consecutive meetings, the Fed has left rates unchanged, despite the president’s calls for rapid cuts. Before moving, most policymakers wanted more clarity on the economic impact of his policies, including sweeping tariffs on imports, and deportations.
Things might be about to change. At the Fed’s next rate-setting meeting, in September, traders currently put the chances of a rate cut at 73.5%, according to CME’s FedWatch tool. It would be the first in nine months.
At the Fed’s last meeting, in July, where it again opted to leave its benchmark interest rate unchanged, two governors opposed the decision – the first time multiple governors have voted against the majority since 1993.
After the meeting, official employment data showed that jobs growth stalled this summer – prompting Trump to fire the federal official in charge of labor statistics – as inflation continued to rise.
At the Jackson Hole symposium in Wyoming today, Powell will address the economic outlook. It will be the last time he speaks as chair at the annual jamboree of central bankers, with his term due to expire next May.
A parade of those aspiring to replace Powell – believed to include the two governors who called for rate cuts at the last Fed meeting, Christopher Waller and Michelle Bowman, and Kevin Hassett, director of Trump’s national economic council – will be interviewed in the coming weeks.
The Trump administration meanwhile continues to encroach on the Fed’s independence under Powell, whom the US president has described as a “numbskull” in a string of personal attacks online.
Trump paid a rare presidential visit to the central bank’s headquarters in July, touring costly renovations that he has suggested – without evidence – are tantamount to fraud.
Earlier this week, Trump called on a Fed governor, Lisa Cook, to resign after one of his allies, the US Federal Housing Finance Agency head, Bill Pulte, alleged that she had committed mortgage fraud. Cook said she had “no intention of being bullied” into stepping down.