JPMorgan Chase: Powell Will Be the Key Decisive Force!

From last Friday (EST) to this Monday (Asia time), stock markets from the US to Asia have been filled with optimism. One of the key reasons behind this is that the speech by Federal Reserve Chairman Jerome Powell at last week's Jackson Hole Global Central Bankers' Symposium was interpreted as signaling interest rate cuts, triggering a strong market rebound.

However, JPMorgan Chase still states that the market should not be overly confident that the Fed will definitely cut rates in September, and particularly should not expect FOMC officials to reach a unanimous decision on rate cuts—in fact, Powell is likely to be the decisive factor in whether rates are cut or not.

Furthermore, it is worth noting that in his speech at the Jackson Hole symposium, Powell stated that any rate cuts would be conducted in a cautious manner. Some Wall Street analysts believe this means an aggressive easing cycle is unlikely to occur in the near term.

JPMorgan Chase commented: "This message may not be welcomed by the (US) government, which is seeking immediate implementation of aggressive easing policies."

John Higgins, Chief Market Economist at Capital Economics, also stated in a report that Powell's remarks "pour three cups of cold water on hopes for significant policy easing by the Fed."

Ryan Sweet, Chief US Economist at Oxford Economics, also said that a rate cut in September would be more like an "insurance" measure, as Powell had previously promised not to wait until signals from the labor market emerge before taking action.

In fact, Powell's stance differs somewhat from others at the Fed because he places greater emphasis on the employment aspect of the Fed's dual mandate (inflation and employment), while tariffs are expected to cause a short-term surge in inflation.

"Powell appears to be preparing for a gradual normalization of interest rates, provided the economy performs as he expects and risks do not change significantly," Sweet wrote in the report.