In an interview with Bloomberg TV earlier on Friday, JP Morgan Chase International Chairman Jacob Frenkel expressed his view on the upcoming speech by the US Federal Reserve (Fed) Chairman Powell due later today at 1400 GMT.
Key Quotes:
Trump shouldn’t intervene with the Fed’s job.
The more interventions there are, the more markets will realize they are ineffective.
There is a huge amount of uncertainty caused by the trade war among other factors.
Trade war, Brexit, political risks should not be only handled by monetary policy.
Trade war has been affecting businesses in a very negative way.
Services is still okay; manufacturing and business investment are not okay.
Powell should be cautious later today.
He should emphasise on caution, going slowly and being data dependent.
By counting heads, it looks like the Fed may cut by 25 bps in September.
But the Fed has to be wary, they are not equipped to deal with the next recession.
There is also a need to have insurance in keeping monetary policy ammunition.
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