— This is the script of CNBC's news report for China's CCTV on August 20, 2019, Tuesday.
As the annual Jackson Hole central bankers' meeting approaches, Trump who always not satisfied with the Fed is putting more press to it. He tweeted on Monday twice, accusing Jay Powell and the Fed with different rhetoric that they are lack of vision.
Trump reiterated that the fed rate, over a fairly short period of time, should be reduced by at least 100 basis points, that is cut 1% rate, with perhaps some quantitative easing as well, saying if that happened, world economy would be greatly and quickly enhanced.
At the same day, however, Eric Rosengren, the President of the Boston Fed, gave Trump tit for tat in an interview, saying he doesn't agree with another rate cut, actually, in July's meeting, he voted against to rate cut.
In his view, there are some risks from both internal and external for US economy, but it is still increasing with a growing consumer spending, and he expects the growth rate for the second half year would be around 2%, so there is no need to take an easing policy as a great leverage ratio caused by that will bring risks to the US economy and may even led to a worse economy recession.
We've known that consumer spending is the major driver to boost US economy growth, accounting for 70% of total US economy. US consumer spending indeed keeps increasing this year, and retail sales rose the most in four months in July. But how long can the consumer spending support US economy? Actually, hints show that US consumer spending is hard to hold up.
According to the university of Michigan survey, US consumer confidence declined to a 7 months' low. And it is interesting that Americans are more worried about the economy as the fed cut rates in July, so they just reduce spending.
It is not easy to predict what will Powell say in the meeting held on this weekend, but the most agree that he probably would not disclose the next step, just do further explanation about " mid-term adjustment".
At July's press conference, he said clearly that there is not just one time for rate cut, so there is a great probability that the fed will cut rate again in Sep, just how much it would cut.
Analysts think that the fed is less possible to cut 50 basis points; instead, it will do it until the US economy has a clearer signal of recession. CME's data shows that
Probability that investors predict the fed will reduce 25 basis points is 95%, only 5% for a 50 basis points cut.
Compared with recent data, we can see that the markets are lowering its expectation to the fed, at that time, will Powell holds up stock marker or not? We will keep an eye on this issue.