The Federal Reserve’s 2024 Economic Symposium begins today in Jackson Hole, Wyoming, with markets (^DJI, ^IXIC, ^GSPC) eagerly awaiting commentary from Fed Chair Jerome Powell regarding the central bank’s outlook on monetary policy adjustments. Annex Wealth Management chief economist and strategist Brian Jacobsen joins Morning Brief to provide insights on the event.
Jacobsen suggests that market expectations for Powell’s speech may be overly optimistic. He notes that these high expectations could lead to Powell being “doomed to disappoint.” Jacobsen speculates that Powell might indicate the Fed could reduce the federal funds rate without actually easing monetary policy, “simply because inflation has come down.”
“In a way maybe it’s gonna be a little bit of a disappointment for people who are expecting a big message about monetary easing, because it’s just about trying to keep policy from becoming more restrictive as inflation continues to trend towards 2%,” Jacobsen explains.
When asked about the market’s interpretation of economic data, Jacobsen notes that it largely depends on “what the Fed is likely going to do as it relates to that data.” However, he cautions that if the Fed were to cut interest rates, it would take time for the economy to feel the effects.
“It’s not necessarily the first cut that is going to help the economy; in fact, it could actually hurt by actually lowering the interest income that savers get,” Jacobsen states.
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