JACKSON HOLE, Wyo. — Financial markets, economic officials, businesses and households nationwide are eager for any hints about when the Federal Reserve will ease up on the economy and cut interest rates.

This week could bring the surest signal yet, when Federal Reserve Chair Jerome H. Powell delivers what will be his most important speech of the year on Friday morning. Analysts broadly expect that long-awaited cuts will begin at the Fed’s next meeting in September. Still, no one knows yet whether central bankers will opt for a more aggressive cut, out of fears that the job market is slowing too much, or simply lower rates by a more typical quarter of a point.

Federal Reserve Powell

Jerome Powell Jose Luis Magana/Associated Press

Powell, though, is unlikely to give much in the way of detailed specifics, if his track record is any guide. Instead, he’ll probably aim for carefully calibrated remarks that leave plenty of options on the table. With inflation ebbing to near-normal levels, Fed leaders are shifting their focus to other parts of the economy that could begin to buckle under the continued weight of high interest rates, which the central bank pushed up to combat rising prices.

Remarks by Fed officials sometimes attract close attention only from policy wonks and stock traders. But with the economy’s future path unclear, Powell’s speech this week comes with high stakes.

“The risks at this point have really swung from being mainly about inflation staying too high, to concerns about whether the labor market is likely to deteriorate,” said Karen Dynan, who was the chief economist at the Treasury Department during the Obama administration and is now at Harvard. “The risks to the dual mandate have gotten much more balanced.”

Powell’s speech is the headline event of the Jackson Hole Economic Symposium, an annual “who’s who” of central bankers and economists in Grand Teton National Park in Wyoming. This time around, Powell and his colleagues have plenty to show for their fight to stabilize the economy: Inflation in July cooled to the lowest level since spring 2021. The unemployment rate has remained low, and consumers are still spending. The United States also leads its peers in beating back price increases and continuing to grow in the face of high rates.

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But instead of celebrating, the Fed is fending off critics who argue it has kept rates too high for too long, jeopardizing the very strength that has defined the post-pandemic economy. Rates now sit at a level between 5.25 and 5.5 percent, where they’ve held steady since July 2023. Just a few days after the central bank opted against a rate cut last month, weaker-than-expected jobs data stoked fears that employers were pulling back. A dicey day of trading followed, sending global markets deep into the red. Wage growth in July was also the slowest since mid-2021, and job vacancies have narrowed considerably.

Officials are also grappling with fresh data showing the economy created 818,000 fewer jobs from April 2023 through March 2024, marking the biggest revision to federal jobs data in 15 years. That only adds to pressure on the Fed to cut rates, and for Powell to possibly address how those pared-back figures shape his outlook on the labor market.

Already, Fed officials have increasingly been talking about managing multiple risks at once. Central bankers are tasked with keeping inflation in check and helping the job market grow as much as possible. After several years of emphasizing inflation, the dual-mandate seesaw is getting trickier to balance again.

“Go too soon, and you undermine progress on inflation,” Powell said at a news conference in July, referring to the timing of rate cuts. “Wait too long or don’t go fast enough, and you put at risk the recovery. And so we have to balance those two things. … It’s a rough balance.”

A growing number of economists say the Fed has fallen behind the curve once again, just as it did when inflation first shot up in 2021. The unemployment rate is gradually rising, and the worry is that the shakiness could ramp up quickly, with huge consequences for workers and their employers.

Lindsay Owens, executive director of the left-leaning Groundwork Collaborative, said the Fed should act proactively – rather than move so slowly that it is only reacting to hazards as they pop up.

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“Since that [July] meeting, we’ve had softening in the labor market, and softer-than-expected inflation numbers,” Owens said. “They’re going to have to play catch-up.”

Owens said Powell has a chance this week to say “have no fear. We’re going to move aggressively next month.”

Minutes released Wednesday from the Fed’s July meeting showed that “several” officials already saw a path to a quarter-point cut or indicated that they could have supported such a move given progress on inflation and a gradual rise in the unemployment rate. That discussion happened days before the release of the disappointing July jobs report, and a few weeks before the latest employment data revisions, suggesting some central bankers already thought the job market had slowed enough to justify a cut even then.

After the surprising July jobs report, financial markets and major Wall Street firms increased the probability that the Fed would cut rates by a half-point in September, instead of a more typical quarter-point. Another option is for Powell to signal a string of quarter-point hikes at each of this year’s remaining meetings in September, November and December.

The Fed tries to avoid the political fray, but a November cut would fall the week of the presidential election. There’s unlikely to be any official mention of politics at Jackson Hole, at least, even as the Democratic National Convention caps off in Chicago and the Trump campaign zigzags the country to woo voters on an economic message.

Fed leaders hurtle past political questions like Olympians. But their oversight of the economy could be significantly altered depending on who wins in November. Economists expect that GOP nominee and former president Donald Trump’s proposals for mass deportations and higher tariffs would send prices up. Trump has also mused about wanting the president to have more control over monetary policy, long considered the Fed’s responsibility free from interference by elected officials. Meanwhile, Vice President Kamala Harris’s populist policy agenda could also stoke inflation by, for example, boosting housing demand, even as her Democratic campaign emphasizes lowering costs for the basics.

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The exact state of the economy right now is also a bit in flux. Appearing on CBS News’s “Face the Nation” on Sunday, Chicago Fed President Austan Goolsbee said that even though rates have stayed high for a year, the economic conditions today are different from what they were last summer when inflation was higher. He said officials have to be cautious when there’s a pileup of “warning signs,” like a rise in credit card delinquencies and small-business defaults.

“When you set a rate high like we have, and hold it there while inflation falls, you’re actually tightening,” Goolsbee said. “Credit conditions are getting tighter.”

Mary Daly, president of the San Francisco Fed, told the Financial Times this week that there wasn’t a need for a dramatic response to a slowing job market. Daly said the economy was “not in an urgent place” or barreling toward recession. As a result, officials could take a more gradual approach.

“Gradualism is not weak,” she said. “It’s not slow, it’s not behind. It’s just prudent.”

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