Powell's Jackson Hole speech will stir speculation on rates

JACKSON HOLE, Wyoming (AP) — When Federal Reserve Chair Jerome Powell delivers what will be his most closely scrutinized speech of the year Friday, investors and economists will be turning over his remarks for any clues about how fast the Fed may continue to raise its key interest rate — and for how long.

With inflation hovering near a four-decade high — almost 9% — Powell will likely stress that the Fed is determined to bring it down to its 2% target, no matter what it takes. The Fed's rate hikes may well defeat inflation in time. But there are fears that they may cause a recession in the process.

Powell's remarks will kick off the Fed's annual economic symposium at Jackson Hole, the first time the conference of central bankers will be held in person since 2019, after it went virtual for two years during the COVID-19 pandemic.

Since March, the Fed has implemented its fastest pace of rate increases in decades to combat inflation, which has punished households with soaring costs for food, gas, rent and other necessities. The central bank has lifted its benchmark rate by 2 full percentage points in just four meetings, to a range of 2.25% to 2.5%.

Those hikes have led to higher costs for mortgages, car loans and other consumer and business borrowing. Home sales have been plunging since the Fed first signaled it would raise borrowing costs.

Yet the central bank finds itself at a turning point. At a news conference after its last policy meeting in late July, Powell suggested that the Fed might decide to slow its rate hikes after having imposed two straight three-quarter-point increases — historically large moves — in June and July.

He also said the Fed's aggressive steps had raised its key short-term rate to a point at which it is neither stimulating nor slowing growth....