Markets brace as all eyes are on the Federal Reserve in Jackson Hole

The world’s financial markets will be on tenterhooks this week as top central bankers meet to discuss the global economy.

Officials from the US Federal Reserve, the Bank of England and the European Central Bank (ECB) will meet for their annual conference in Jackson Hole, Wyoming.

But all eyes will be on Federal Reserve Chairman Jerome Powell when he delivers a speech on Friday on the U.S. economic outlook.

Experts expect Powell to signal a cut in borrowing costs after the Federal Open Market Committee last month kept its benchmark rate in a range of 5.25 percent to 5.5 percent.

The move put the US central bank at odds with the Bank of England, which decided to cut interest rates for the first time in more than four years to 5 percent.

Speaking ahead of the conference, Danni Hewson, head of financial research at AJ Bell, said: “Investors are grappling with the implications of policy divergence and central bankers are finding themselves centre stage for reasons they may not be entirely comfortable with.”

“Markets are likely to pay attention, especially as they continue to price in – and even call for – rate cuts from the US Federal Reserve… Some investors may be hanging on every word,” he added.

Barclays analysts explained that “the narrative on monetary policy easing is building” and the focus will be on Powell to suggest what the Fed will do next.

This comes after the US economy was plunged into crisis amid fears of recession.

Figures released earlier this month show U.S. employers added just 114,000 jobs in July, compared with forecasts for 185,000, and unemployment was the highest since October 2021.

This triggered a massive global sell-off as fears grew that the Fed had left it too late to cut rates and achieve a “soft landing” for the economy.