Fed’s Powell Confronts a New Reality at Jackson Hole

This time last year, Federal Reserve Chair Jerome Powell said at the central bank’s annual conference in Jackson Hole, Wyoming, that policymakers were prepared to raise interest rates further amidst evidence the economy was stronger than most anyone expected. It turns out they didn’t need to. The economy and inflation have now cooled to a point where the Fed is expected to start cutting rates in a matter of weeks. Now there’s worry that Powell has waited too long to reduce borrowing costs after the government said this week that the number of workers on payrolls was 818,000 less for the 12 months through March than originally reported, the largest downward revision since 2009. Indeed, minutes of the July 30-31 Federal Open Market Committee meeting released Wednesday showed that several policymakers acknowledged there was a plausible case for lowering rates then.

So with Powell scheduled to deliver the keynote speech at Jackson Hole on Friday, he will need to reassure his audience that the Fed isn’t behind the curve and that the elusive soft landing of subdued inflation and a still-robust economy remains well within reach. Bloomberg Opinion columnists have been exploring the big questions that Powell should address and why economic turning points can be so hard to pick. Here are some highlights: