Analysts at Bank of America believe it’s unlikely that Powell will challenge the current market expectations, which have already priced in four rate cuts this year.

Powell is scheduled to speak about the economic outlook this Friday at the Jackson Hole Economic Symposium, an event closely watched by global investors.

Although the dollar is currently strong, Bank of America analysts highlighted that the optimism surrounding its strength could pose downside risks. Despite this, the bank argues that Powell is likely to avoid contradicting market expectations. “We don’t expect Powell to push back against market pricing. He will likely keep the option of aggressive easing on the table, contingent on data leading up to the September meeting,” they said.

Chicago Federal Reserve Bank President Austan Goolsbee also emphasized the importance of timing when it comes to interest rate decisions. He noted that the Fed’s actions typically take time to impact the economy and warned that waiting too long to lower rates could be detrimental. Goolsbee cautioned that if the central bank falls behind in responding to economic developments, it might be too late to counteract any significant downturn.

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