Summer winds down

In a quiet, late summer week, markets were relatively subdued, hoping to enjoy the last bit of calm before school starts.

The cautious Federal Reserve seems increasingly likely to lower its federal funds rate when it next meets, on September 18. As economists gather for the annual symposium in Jackson Hole, Wyo., more speakers appear confident the process of lowering rates can begin. Inflation continues to ease lower, while weekly jobless claims show no signs of material weakening. The Fed is wary of moving too quickly, before the battle against inflation is won, but equally wary of waiting too long for fear of doing unnecessary damage to workers. Finding that “just-right” point is tough, but it is getting closer. For his part, Fed Chair Jerome Powell said, “The time has come for policy to adjust…The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

Next week brings more economic data on consumer confidence, weekly jobless claims, housing and inflation. All this, plus Powell’s speech, should give markets plenty to digest over Labor Day weekend.