The Jackson Hole Symposium will start on Friday and analysts expect that US Fed Chief Powell will use it to clarify the central bank’s monetary policy moving forward after cutting interest rates at the last meeting by 25 basis points. Powell will kick-off the gathering with a speech on the challenges of monetary policy. He is expected to mention topics ranging from deglobalization and trade wars, an unusually low interest rate environment, $16.7 billion worth of bond which carry a negative yield, the ongoing attacks against his central bank by US President Trump and the risks of a global recession which the US won’t be able to escape. Events which could accelerate the global slowdown, such as Brexit or the Hong Kong protests, are entirely out of the US Fed’s sphere of influence.

Earlier this year the 3-Month/10-Year yield curve inverted which was followed last week but the 2-Year/10-Year yield curve inversion. Some analysts claims that the Fed is too late and too far behind in order to combat this inversion which has in the past signalled a recession. Maury Obstfeld from the Peterson Institute for International Economics added “There are all sorts of hazards out there.” Powell is expected to open the door for a 25 basis point interest rate cut during the next meeting in September, but Fed watchers are eager to learn if he is willing to deliver a 50 basis point cut. Chief economist at JPMorgan Chase, Bruce Kasman, noted “It’s certainly a possibility. But I don’t see it. The data don’t justify that.” Will Powell cave in to pressures from Trump and how will this impact the US Dollar?