Multiple Fed Officials Including Powell Scheduled for Public Speeches
August PCE Inflation and Q2 Growth Rate Data to Be Released
This week marks the beginning of a busy week on Wall Street in the United States. As the Federal Reserve (Fed) has initiated an interest rate cut cycle, a series of public speeches by Fed officials are scheduled. Investors are expected to gain insights into the reasons behind the significant rate cuts, economic outlook, and future interest rate paths through the remarks of Fed officials. Economic indicators that assess the U.S. economic situation, such as inflation, growth rate, and manufacturing data, will also be released consecutively.
According to the Fed on the 22nd (local time), a series of public speeches by Jerome Powell, Chair of the Fed, and members of the Federal Open Market Committee (FOMC) are scheduled this week. In addition to Chair Powell, Fed Governors Adriana Kugler and Lisa Cook, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, and Austan Goolsbee, President of the Federal Reserve Bank of Chicago, will participate in various public events and speak.
Since the Fed lowered the benchmark interest rate by 0.5 percentage points from 5.25-5.50% to 4.75-5.90% at the FOMC regular meeting on the 18th, Wall Street is paying closer attention than ever to the remarks of Fed officials this week. Investors are expected to digest the speeches to understand the background of the rate cuts, economic outlook, and the direction of future rate cuts. The explanation behind the "big cut" (0.5 percentage point rate cut) is very important to investors as it reflects the Fed's perception of the economic situation. If the speeches confirm that the rate cuts were defensive measures due to recession concerns, it could be negative for the stock market. Michelle Bowman, a Fed Governor who voted against the big cut, is also expected to speak publicly this week, potentially exposing differences of opinion among Fed officials.
Anna Wong, an economist at Bloomberg Economics (BE), analyzed, "Our baseline forecast is that the unemployment rate will reach 4.5% by the end of 2024 and rise to 5% next year," adding, "The Fed's 0.5 percentage point rate cut increases the possibility of a soft landing but does not guarantee it."
This week will also see a flood of key economic indicators. The U.S. Department of Labor will release the Personal Consumption Expenditures (PCE) price index for last month on the 27th, which is expected to support the rationale for the big cut. The PCE price index, which the Fed prioritizes most, is forecasted to have risen 0.1% month-over-month and 2.3% year-over-year in August. Notably, the year-over-year increase is expected to be the smallest since early 2021, approaching the Fed's target of 2%. The decline in energy and food prices is presumed to have driven the drop in inflation. The core PCE price index, which excludes the volatile energy and food prices and shows the underlying inflation trend, is expected to have risen 0.2% month-over-month for the third consecutive month.
On Wall Street, there is speculation that the continued easing of inflationary pressures will reinforce confidence in the Fed's rate cuts. Alongside the PCE price release, personal spending and income data are also expected to confirm robust household consumption growth, signaling the continuation of the economic expansion phase.
Additionally, the final figure for the U.S. real Gross Domestic Product (GDP) growth rate for the second quarter will be released on the 26th. It is expected to show a 3% annualized growth rate, doubling the 1.4% growth of the first quarter. The S&P Global Manufacturing and Services Purchasing Managers' Index (PMI), consumer confidence index, new home sales, durable goods orders, and weekly initial jobless claims will also be announced.
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