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All Looks At The President Of The Fed When Fears Of Recession Increased



Federal Reserve Chairman Jerome Powell faces a political and economic crisis as the central bank struggles to defend its independence and the US economy amid escalating attacks from President Trump Donald John TrumpSara Hubaby Sandero on Fox News – Iran's Fight Against a Ship is a side show of events in the Persian Gulf, South Korea: US, North Korea will resume nuclear talks "soon" MORE .

Washington and Wall Street will understand Powell's words Friday morning as he speaks for the first time in a recent series of economic red flags raising concerns about the impending recession.

In the weeks since last month's Fed rate cut ̵

1; the first since 2008 – Trump has escalated its trade war with China, stock markets have turned volatile and gloomy data around the world signaling a potential economic slowdown.

With the threat of a recession in the background, Powell's speech at the F Annual Summit in Jackson Hole, Wyo., Will be carefully selected for hints on the next move by the central bank.

The last time Powell spoke publicly was at a press conference on July 31 after a Fed rate cut. He will not take questions from reporters after remarks Friday, which begin at 10:00 AM ET.

Powell is expected to emphasize the Fed's commitment to data-dependent policy without exaggerating further reductions in rates. But this time, he is faced with obstacles for Powell, who must balance the concerns of troubled investors, the turbid economy, the divided Fed policy committee and the angry president.

"These are four very different aspects that he has to juggle and they don't really connect everything so well," said Daniel Alpert, a managing partner at investment firm Westwood Capital. "He is in a very, very difficult place."

Trump tried to discredit warnings of a potential recession that could devastate the country and condemn his bid for re-election in 2020, escalating his feud with the Fed, specifically with Powell selected by him.

In tweets and impromptu press releases, the president accused the Federal Reserve of undermining what he called a "very strong economy" by providing no greater incentive, even when the United States was well ahead of other leading powers. [19659004] "The economy is doing very well. The Federal Reserve can easily do the recording setup! "Tweeted Trump on Thursday. "Let America Win Big, Not Just Win!"

The Fed's rate committee may decide to cut rates at its September meeting, which would be somewhat satisfying for Trump. Financial markets are widely expecting a rate cut of at least 0.25 percentage points, although some forecasters expect a larger decrease.

Moving to lower percentages can dispel some of Trump's anger and Wall Street anxiety, alleviating pre-election anxieties. But the shadow of Trump's pressure for cheaper prices will force Powell to defend the Fed's independence at a time of unique vulnerability.

"The president can attack the Fed six times a day, and the Fed cannot breathe a word that seems to politicize it. by countering the president. This is a really difficult challenge, "says Karen Sho Petru, Managing Partner at Federal Financial Analytics."

"We will take an unusually strong position from the President focusing more on institutional protection than on the specifics of monetary policy, a really clear explanation of why the Fed what has been done. "

Powell takes heat from Fed observers and investors who say he struggled to explain the bank's rationale and prospects for the economy. His attempt in July to explain the various causes and the Fed's interest rate cuts have left some puzzled by the bank's approach to the cloud economic horizon. 19659004] In order to heighten the problems in the financial markets, Powell must reach a lack of clear consensus among the members of the Federal Open Market Committee (FOMC) on setting rates as to whether another or ven useful. [19659004] Several FOMC members have said that another rate cut will do little to counteract the forces that weigh on the economy while wasting other Fed ammunition against a serious downturn.

"Cutting interest rates is unlikely to resolve this uncertainty," said Esther George, president of the Federal Reserve Bank of Kansas City and a FOMC member with a voting right, in an interview Thursday with Yahoo Finance.

"I take this into account when considering how our policy settings will help in these situations. Or are there other things to consider? "Add George, who was one of two FOMC members who voted against the tariff cut in July.

Philadelphia Federal President Patrick Harker, who is not eligible to vote for FOMC,

"I think we should stay here for a while and see how things go," Harker tells CNBC.

The lack of unanimity among Fed politicians and the amount of time until the next FOMC meeting makes Powell less likely to give a clear signal about the bank's next move.

With a set of pending economic data to be released in the weeks leading up to the next Fed meeting, including the monthly job report, there is ample time for the economic outlook to change before the bank decides.

"We expect Powell's remarks to be in compliance with the additional conditions of accommodation, but we do not expect it to be overly explicit," Lewis Alexander, chief U.S. economist at Nomura, wrote in a research note Thursday. "Many things can happen between now and the FOMC meeting in September."

Alpert added that the Fed's message seemed to be "until we see the white eyes of recession in real data, we are very restrained about moving, because we don't have that far. "


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