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Looking for clarity from Fed's Powell? Good luck with that

JACKSON HOLE, Wyo. (Aug. 23): When Federal Reserve leader Jerome Powell speaks in Jackson Hole, Wyoming, on Friday, traders will comb through their comments for clues as to whether the US central bank will deliver more interest rates this year. .

They may be disappointed.

For all his reputation as the most arguably the person who has run the US central bank for decades, if not ever, Powell may be reluctant in his comments to other central bankers at this year's Kansas City Fed's economic symposium to say much about where interest rates will go up. The reason: he actually doesn't know it and doesn't want to be locked up.

Fellow Fed politicians, even those who supported Julie's interest rate cut, signal reluctance to do more, with Philadelphia Fed chief Patrick Harker asking to wait-and-see approach and Dallas Fed chief Robert Kaplan, saying he is "open minded" but will "avoid having to take further action."

Since the Fed cut its interest rates in July, the US economic picture has darkened. [1[ads1]9659002] New threats from President Donald Trump to impose additional tariffs on China, and then a decision to postpone some of these new taxes by December, are already heightening business uncertainty.

The US factory activity is on the decline.

Globally, dozens of central banks are reducing interest rates and some economies appear to be falling in recession.

Finally, in a signal that investors are increasingly concerned about a US recession, the 2-year Treasury slumps under its ten-year debt on Thursday in yet another "inversion of the yield curve."

At the same time, labor markets are still strong and consumers continue to use in stores and online.

Part of the reason the inverted yield curve is because the US economy remains so much stronger than large parts of Europe: investors would rather have "safe" US Treasuries, even with their falling interest rates, say, German bonds with negative returns.

In addition to the conflicting economic data, expensive market signals and dissent from the Fed, Powell may also want to lay low to avoid attracting even more vitriol than he already has as the first Fed boss publicly called "clueless" by the President o appointed him.

“The economy is doing very well. The Federal Reserve can easily do that Record Setting !, Trump said on Twitter Thursday. “Be early (for a change), not late. Let America win big, instead of just winning! ”

Although Powell sticks to a fixed piece, characterizing last month's move as a" mid-cycle "adjustment and retaining the options going forward, he can still disappoint markets and court even more turbulence.

However, investors have high hopes that the Fed will stimulate the economy, placing overwhelming bets that the central bank will lower its borrowing costs again at its political meeting on September 17-18.

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