It’s an exciting buzz going on in stock markets across the world, as they eagerly await a key speech to be delivered by Jerome Powell, the big boss of the US Federal Reserve. Investors around the globe hope that he will signal or announce an interest rate cut to save the day for the economy. This speech is going to take place at the Jackson Hole summit, since big decisions about the economy are taken here.

Jerome Powell, chief of the US Federal Reserve, will address the Jackson Hole summit in due time. The scenic mountain resort of Wyoming annually hosts this very important event in the life of central bankers. Investors are ardently awaiting to know if Powell will signal a cut in the interest rate, a move that could make borrowing cheaper and help boost the Covid-hurt economy.

The big question on everyone’s mind, of course, is whether the Federal Reserve will cut interest rates soon. Since mid-March last year, when the pandemic took off, the Fed has kept rates high to control inflation. But now, many people think it’s time for a change. The probability of the Fed cutting interest rates at their next meeting is 71.5%, as according to the CME Group’s FedWatch pricing tool. The tracking in the market would suggest that this is very likely, as there is even a chance for a 0.5 percentage point cut, with a smaller 0.25 percentage point reduction seeming the most probable.

“The decision by the Fed is going to have a great impact because lower interest rates could make borrowing money less expensive and, thus, would encourage investment in businesses and consumer spending, thereby fostering economic growth. “Except the Feds also have to be careful. If they lower rates too fast,” something like inflation could ensue: rapid price escalation. “So, Powell’s speech will give clues about how the Fed plans to handle this delicate balance.”.

Bob Savage works for BNY Mellon, a major US investment bank. The investors have permanently fixed themselves on a “dovish” (or friendly) approach toward Powell, Bob says. It means he expects him to be sympathetic to the economy and suggest a cut in the rate. Therefore, investors are beginning to love risky stocks and to shift their money around to other countries’ currencies, since the Federal Reserve will make money less valuable in the near future.

James Knightley, an economist at another big bank, ING, thinks Powell will confirm the Fed’s plan to cut rates in September. Knightley is watching carefully for signals that Powell might cut rates even more if the economic data shows weaker performance. Recent updates are showing that the job growth isn’t as strong as expected, which could make the Fed more likely to lower rates.

However, he has spoken at the Jackson Hole conclave before with mixed results. In 2022, his comments about fighting inflation precipitated a wholesale sell-off in the stock markets. Investors hope this time we will see a very different, much more positive outcome.

And the speech is important at this time because other major central banks are on the move: Just last week, the European Central Bank cut interest rates for the first time in over two years and possibly could cut them again in September. That means a lot of the world’s most important global financial leaders are considering taking action.

Investors will also be watching for any hints that Powell is likely to follow his go-slow path or if he might indicate a more aggressive approach to rate reductions. The stakes are big as the outcome could influence everything from stock market performance to the cost of borrowing for homes and businesses.

In a nutshell, Jerome Powell is going to deliver a major speech to the markets. A lot of buzz has been around his speech in light of second-quarter earnings hoping for interest rates to be cut, which might spur growth. All of Powell’s comments are going to be broken down for clues to possible rate cuts in the near future, and his speech could set the mood for financial markets around the world.

So Powell gets ready to address Jackson Hole and all ears are on him at that podium. Is he going to come with something that could, again, work as a boost to the economy, or is he going to give a speech where investors have more questions than they entered with? The truth lies out there, but the one thing we know for sure is his words will have a big impact on the financial world.