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Here’s everything to expect from Fed Chair Powell’s speech Friday in Jackson Hole

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U.S. Federal Reserve Chair Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., July 31, 2024. 

Kevin Mohatt | Reuters

For all the attention being paid to Federal Reserve Chair Jerome Powell’s policy speech Friday, the chances of it containing any startling news seem remote.

After all, the market has its mind made up: The Fed is going to start cutting rates in September — and likely will keep cutting through the end of the year and into 2025.

While there are still some questions about the magnitude and frequency of the reductions, Powell is now left to deliver a brief review of where things have been, and give some limited guidance about what’s ahead.

“Stop me if you’ve heard this before: They’re still data dependent,” said Lou Crandall, a former Fed official and now chief economist at Wrightson-ICAP, a dealer-broker where he has worked for more than 40 years. He expects Powell to be “directionally unambiguous, but specifics about how fast and exactly when will depend on the data between now and the meeting. Little doubt that they will start cutting in September.”

The speech will be delivered at 10 a.m. ET from the Fed’s annual conclave of global central bankers in Jackson Hole, Wyoming. The conference is titled “Reassessing the Effectiveness and Transmission of Monetary Policy” and runs through Saturday.

If there were any doubts about the Fed’s intentions to enact at least a quarter percentage point cut at the Sept. 17-18 open market committee meeting, they were put to rest Wednesday. Minutes from the July session showed a “vast majority” of members in favor of a September cut, barring any surprises.

Philadelphia Fed President Patrick Harker drove the point home even further Thursday when he told CNBC that in “September we need to start a process of moving rates down.”

A question of guidance

A main question is whether the first reduction in more than four years is a quarter point or half point, a topic on which Harker would not commit. Markets are betting on a quarter but leaving open about a 1-in-4 chance for a half, according to the CME Group’s FedWatch.

A half-point move likely would require a substantial deterioration in economic data between now and then, and specifically another weak nonfarm payrolls report in two weeks.

“Even though I think the Fed’s base case is they’ll move a quarter, and my base case is they’ll move a quarter, I don’t think they’ll feel the need to provide any guidance around that this far out,” Crandall said.

In previous years, Powell has used Jackson Hole speech to outline broad policy initiatives and to provide clues about the future of policy.

At his first appearance, in 2018, he outlined his views on the interest and unemployment rates considered “neutral” or stable. A year later, he indicated rate cuts were coming. In a speech delivered amid racial protests in 2020, Powell unveiled a new approach that would allow inflation to run hotter than usual, without rate hikes, in the interest of promoting a more inclusive jobs market. That “flexible average inflation targeting,” though, would precede a period of surging prices — leaving Powell in the ensuing three years to navigate a delicate minefield of policy.

This time around, the task will be to confirm the market’s expectations while also indicating his impressions of the economy and in particular the moderating of inflation pressures and some concerns over the labor market.

“To us, the key will be Chair Powell’s tone, which we expect to lean dovish” or towards lower rates, Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions, said in written commentary. “Simply put, inflation continues to trend towards the 2% target seemingly at a rate exceeding consensus. Combine this with signs that the labor market is softening and one gets the sense that there is little need to retain a hawkish stance.”

Listening to markets

The Fed has held its key overnight borrowing rate in place for the past 13 months following a series of aggressive hikes. Markets have mostly done well under the higher-rate regime but rebelled briefly after the July meeting following signs of a deteriorating labor picture and a weakening manufacturing sector.

Powell is expected to give at least a nod to some economic headwinds, as well as the progress the Fed has made in its inflation fight.

“We expect Powell to express a bit more confidence in the inflation outlook and to put a bit more emphasis on downside risks in the labor market than in his press conference after the July FOMC meeting, in light of the data released since then,” Goldman Sachs economist David Mericle said in a recent note.

Goldman is about at the consensus of market expectations: rate cuts at each of the next three meetings, followed by more easing in 2024 that eventually will shave about 2 percentage points off the fed funds rate — a policy path that will be teed up, in very general terms, by Powell in Jackson Hole.

Fed chairs profess to not be sensitive to financial market movements, but Powell no doubt saw the reaction after the July meeting and will want to assuage fears that the central bank will keep waiting before it begins to ease.

“Powell is inclined to support the stock market,” said Komal Sr-Kumar, head of Sri-Kumar Global Strategies. “Time and again, he has indicated rates are going to come down. They haven’t come down, but this time around, he’s going to do it.”

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Buffett denies social media rumors after Trump shares wild claim that investor backs president crashing market

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Berkshire Hathaway responds to 'false reports' on social media

Warren Buffett went on the record Friday to deny social media posts after President Donald Trump shared on Truth Social a fan video that claimed the president is tanking the stock market on purpose with the endorsement of the legendary investor.

Trump on Friday shared an outlandish social media video that defends his recent policy decisions by arguing he is deliberately taking down the market as a strategic play to force lower interest and mortgage rates.

“Trump is crashing the stock market by 20% this month, but he’s doing it on purpose,” alleged the video, which Trump posted on his Truth Social account.

The video’s narrator then falsely states, “And this is why Warren Buffett just said, ‘Trump is making the best economic moves he’s seen in over 50 years.'”

The president shared a link to an X post from the account @AmericaPapaBear, a self-described “Trumper to the end.” The X post itself appears to be a repost of a weeks-old TikTok video from user @wnnsa11. The video has been shared more than 2,000 times on Truth Social and nearly 10,000 times on X.

Buffett, 94, didn’t single out any specific posts, but his conglomerate Berkshire Hathaway outright rejected all comments claimed to be made by him.

“There are reports currently circulating on social media (including Twitter, Facebook and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false,” the company said in a statement Friday.

CNBC’s Becky Quick spoke to Buffett Friday about this statement and he said he wanted to knock down misinformation in an age where false rumors can be blasted around instantaneously. Buffett told Quick that he won’t make any commentary related to the markets, the economy or tariffs between now and Berkshire’s annual meeting on May 3.

‘A tax on goods’

While Buffett hasn’t spoken about this week’s imposition of sweeping tariffs from the Trump administration, his view on such things has pretty much always been negative. Just in March, the Berkshire CEO and chairman called tariffs “an act of war, to some degree.”

“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett said in the news interview with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”

During Trump’s first term, Buffett opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.

“If we actually have a trade war, it will be bad for the whole world … everything intersects in the world,” Buffett said in a CNBC interview in 2019. “A world that adjusts to something very close to free trade … more people will live better than in a world with significant tariffs and shifting tariffs over time.”

Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash exceeding $300 billion. His conglomerate has a big U.S. focus and has large businesses in insurance, railroads, manufacturing, energy and retail.

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Stocks making the biggest moves midday: PLTR, CAT, AAPL JPM

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Powell sees tariffs raising inflation and says Fed will wait before further rate moves

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US Federal Reserve Chair Jerome Powell holds a press conference after the Monetary Policy Committee meeting, at the Federal Reserve in Washington, DC on March 19, 2025. 

Roberto Schmidt | Afp | Getty Images

Federal Reserve Chair Jerome Powell said Friday that he expects President Donald Trump’s tariffs to raise inflation and lower growth, and indicated that the central bank won’t move on interest rates until it gets a clearer picture on the ultimate impacts.

In a speech delivered before business journalists in Arlington, Va., Powell said the Fed faces a “highly uncertain outlook” because of the new reciprocal levies the president announced Wednesday.

Though he said the economy currently looks strong, he stressed the threat that tariffs pose and indicated that the Fed will be focused on keeping inflation in check.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said in prepared remarks. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

The remarks came shortly after Trump called on Powell to “stop playing politics” and cut interest rates because inflation is down.

There’s been a torrent of selling on Wall Street following the Trump announcement of 10% across-the-board tariffs, along with a menu of reciprocal charges that are much higher for many key trading partners.

Powell noted that the announced tariffs were “significantly larger than expected.”

“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said. “The size and duration of these effects remain uncertain.”

Focused on inflation

While Powell was circumspect about how the Fed will react to the changes, markets are pricing in an aggressive set of interest rate cuts starting in June, with a rising likelihood that the central bank will slice at least a full percentage point off its key borrowing rate by the end of the year, according to CME Group data.

However, the Fed is charged with keeping inflation anchored with full employment.

Powell stressed that meeting the inflation side of its mandate will require keeping inflation expectations in check, something that might not be easy to do with Trump lobbing tariffs at U.S. trading partners, some of whom already have announced retaliatory measures.

A greater focus on inflation also would be likely to deter the Fed from easing policy until it assesses what longer-term impact tariffs will have on prices. Typically, policymakers view tariffs as just a temporary rise in prices and not a fundamental inflation driver, but the broad nature of Trump’s move could change that perspective.

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” Powell said. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.”

Core inflation ran at a 2.8% annual rate in February, part of a general moderating pattern that is nonetheless still well above the Fed’s 2% target.

In spite of the elevated anxiety over tariffs, Powell said the economy for now “is still in a good place,” with a solid labor market. However, he mentioned recent consumer surveys showing rising concerns about inflation and dimming expectations for future growth, pointing out that longer-term inflation expectations are still in line with the Fed’s objectives.

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