The Federal Reserve Chairman Powell is expected to appear and deliver a speech at the Global Central Bank Annual Meeting in Jackson Hole, Wyoming on August 22 at 10 PM Taiwan time. Although the current market still anticipates the Fed will restart rate cuts in September, the shadow cast by Trump's tariffs on US inflation and global economic prospects means monetary policy in September remains uncertain. Therefore, Powell's speech at the Global Central Bank Annual Meeting, whether it will release clear easing signals or continue the usual "data-dependent" approach, is of great concern to global investors.
Jackson Hole Frontline: Market Bets on September Rate Cut
First, let's look at market predictions. According to the latest data from the CME Group Fed Watch tool, the market currently estimates an 84.8% probability that the Fed will restart rate cuts in September by 25 basis points. Although this is significantly higher than the 55.9% a month ago, the probability peaked at 98% in late July, indicating increasing market uncertainty.
Against this background, analysts predict that Powell's speech this year may not be as explicit as last year, due to the high uncertainty in the current US labor market and inflation situation. He may maintain a wait-and-see attitude, emphasizing patience, reaffirming data dependency, but without committing to September's direction. This wording can maximize the Fed's policy flexibility and avoid locking in the monetary policy path before key data is released.
Goldman Sachs Optimistic Forecast: Three Rate Cuts This Year
However, it's worth noting that unlike the current conservative market analysis, Goldman Sachs predicts the Fed will cut rates three times this year, in September, October, and December, reasoning that data shows weak US employment growth.
Goldman Sachs analysts point out that employment growth has slowed to about 30,000 jobs per month, far below the approximately 80,000 jobs per month needed for full employment. Future data revisions may lean negative. Besides trade and immigration issues, other risks exist, such as supplementary recruitment gradually fading and growth in most industries approaching zero. While unemployment remains stable, Goldman warns that even slight labor market weakness is concerning. They even predict the Fed might cut rates by 50 basis points, provided unemployment rises sharply.
Accordingly, Goldman Sachs also states that given the high probability of restarting rate cuts in September, they remain optimistic about short-term US Treasury bonds and recommend a long strategy for profit.
