JACKSON HOLE, Wyoming, Aug 22 (Reuters) - U.S. Federal Reserve Chair Jerome Powell’s speech to the annual Jackson Hole economic conference on Friday comes amid unprecedented pressure on the central bank from President Donald Trump, but mixed economic data may pull Powell toward a middle ground that leaves major questions unresolved.
Investors are expecting and Trump is demanding a rate cut when the Fed meets next month, and two Fed governors began pushing for cuts with dissents at the central bank’s last policy meeting on concerns the labor market may be weakening faster than headline employment data suggests.
But inflation remains above the Fed’s 2% target and is expected to move higher as the cost of Trump’s import tariffs works its way into retail prices, a reason for caution in lowering rates during a price-adjustment process some policymakers feel may last into next year.
Lowering rates while prices are rising and inflation is still above target could send a dangerous message to consumers from a Fed whose credibility in controlling inflation is one of its major assets, Kansas City Fed President Jeffrey Schmid said in a CNBC interview taped on Wednesday night ahead of the conference kick-off. Schmid, the conference host, has voted this year with the majority to keep rates unchanged at 4.25% to 4.50%.
