The stock market ended last week on a strong note as Federal Reserve Governor Jerome Powell signaled that the Fed may lower interest rates in September. Investors rallied on the news, pushing markets to new highs.
Fed Policy & Inflation Outlook
Powell’s comments came during the annual Jackson Hole Economic Symposium, where he emphasized that upcoming inflation data will be critical for the Fed’s next policy decision. The central bank continues to monitor inflation closely, and with their next meeting just two weeks away, all eyes are on the Personal Consumption Expenditures (PCE) Index.
This Week: Key Economic Data
The PCE Index, the Fed’s preferred measure of inflation, will be released later this week.
A benign inflation reading could strengthen the case for a September rate cut.
Next week, the Jobs Report will provide additional clues. The most recent jobs report was weaker than expected, and another soft reading would further support lower interest rates.
Market Outlook
In my view, the Federal Reserve is likely to cut rates by 0.25% in September. The larger question is what comes next — whether the Fed will continue with gradual cuts or pause after one move.
For now, the markets are optimistic. Friday’s rally pushed indexes to new highs, though trading is expected to be light this week ahead of the Labor Day holiday.