JACKSON HOLE, Wyoming — With the Federal Reserve considered certain to start cutting its benchmark interest rate next month, Chair Jerome Powell’s highly anticipated speech Friday morning at an economic conference will be closely watched for any hints about how many additional rate cuts might be in the pipeline.

Powell is expected to say the Fed has become more confident that inflation is nearing its 2% target, more than two years after it hit a painful four-decade high. Yet the Fed chair may take an overall cautious approach in his remarks at an annual conference of central bankers in Jackson Hole, Wyoming. Economists note that forthcoming economic data, including a monthly jobs report on Sept. 6, will help determine the size of future Fed rate cuts — whether a typical quarter-point cut or a more aggressive half-point drop — and how fast they occur.

“We think he will seek to dampen expectations of [a half-point cut] as well as reiterate that the Fed is data-dependent and does not make decisions in advance,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note.

Powell’s speech comes as the central bank is moving toward achieving a much sought-after “soft landing,” in which its rate hikes — 11 of them in 2022 and 2023 — manage to curb inflation without causing a recession. Inflation was just 2.5% in July, according to the Fed’s preferred measure, having tumbled from a 7.1% peak two years ago.

The progress made on inflation has likely made many Fed officials more open to cutting rates several times this year now that elevated borrowing costs have largely succeeded in cooling the economy and taming inflation.

Still, a slowdown in hiring and an uptick in the unemployment rate last month heightened concern that the Fed could soon make a mistake in the other direction — by keeping rates too high for too long, throttling growth and plunging the economy into recession. Powell will likely refer to that balancing act in his speech Friday.

On Wednesday, minutes from the Fed’s most recent meeting, held July 30-31, showed that the “vast majority” of policymakers said at the time that they would likely support a rate reduction at the next meeting in mid-September as long as inflation stayed low. Several of the Fed’s 19 officials even supported a rate cut at that meeting, the minutes showed.

Also Wednesday, the Labor Department revised its estimate of job growth for the 12 months that ended in March: It said that 818,000 fewer jobs were added during that year than it had earlier reported. The revisions, which were preliminary, will be finalized in February.

Hiring over that period was still solid, averaging 174,000 a month rather than 242,000, the government said. Yet because the figures show that hiring wasn’t as robust as was previously thought, a Fed rate cut next month is “a certainty,” Shepherdson wrote.

Economists generally agree that the Fed is getting closer to conquering high inflation, which brought hardship to millions of households beginning three years ago as the economy rebounded from the pandemic recession. Yet few economists think Powell or any other Fed official is prepared to declare “mission accomplished.”

After the government reported this month that hiring in July was much less than expected and that the jobless rate reached 4.3%, the highest in three years, stock prices plunged for two days on fears that the U.S. might fall into a recession. Some economists began speculating about a half-point Fed rate cut in September and perhaps another identical cut in November.

But healthier economic reports last week, including another decline in inflation and a robust gain in retail sales, partly dispelled those concerns. Wall Street traders now expect the Fed to cut its benchmark rate by a quarter-point in both September and November and by a half-point in December. Mortgage rates have already started to decline in anticipation of rate reductions.

A half-point Fed rate cut in September would become more likely if there were signs of a further slowdown in hiring, some officials have said.

Raphael Bostic, president of the Fed’s Atlanta branch, said in an interview Monday with The Associated Press that “evidence of accelerating weakness in labor markets may warrant a more rapid move, either in terms of the increments of movement or the speed at which we try to get back” to a level of rates that no longer restricts the economy.

“I’ve got more confidence that we are likely to get to our target for inflation,” he said. “And we’ve seen labor markets weaken considerably relative to where they were” last year. “We might need to shift our policy stance sooner than I would have thought before.” Several months earlier, Bostic had said he would likely support just one rate cut in the final three months of the year.
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Windhoek, Namibia — Namibia’s minister of agriculture has urged farmers in the Southern African country to look at alternative markets for its charcoal and beef products since the European Union, one of its largest trading partners, has implemented nontariff barriers that came into force in 2023.

A unilateral decision by the European Union to impose regulations on agricultural products from Namibia that come from areas that have been deforested has raised concerns regarding market access for products such as beef and charcoal.

These products will no longer have access to the European market unless they comply with the new rules that Namibian Minister of Agriculture Calle Schlettwein describes as stringent and prohibitive.

“When you want to conduct agriculture, you have to clear lands. We have [the] charcoal industry. We have a number of industries in the agricultural sector where we do have an impact on deforestation. And I said that farmers must be careful that if they do that, they must be in compliance with these regulations.”

The chairperson of the Namibia Biomass Industry Group, which represents over 150 members in the sector, Colin Lindeque, says the European Union Deforestation Regulation (EUDR) will not negatively impact exports to the EU.

He said the EU is only asking for additional information. It wants geographic location tags that show that the charcoal they are exporting does not come from areas that have been deforested, but rather areas that are regarded as savannah, an argument with which Schlettwein disagrees.

Lindeque told VOA the regulations are fair, and the members of the Bio-mass Industry Group are compliant and meet the new EU requirements.  

“There was a consultant here recently from the EU looking at EUDR, and they specifically said Namibia’s bush encroachment is definitely not a forest in their opinion. But one of the challenges is our government hasn’t made the distinction, and that is actually the bigger point of interest, because we in the current Forest Act of 2001 do not even define what a forest is.”

Director of Forestry at Namibia’s Ministry of Environment, Johnson Ndokosho, says the ambiguities in the country’s law regarding what is considered a forest, woodlands and savannah are being dealt with in the new Forestry Act, which is being revised.

He cautioned that Namibia is at the mercy of the EU when it comes to whether Namibia’s beef and charcoal will still be able to enter their market.

“If they found that maybe this beef is coming out of an area where deforestation is occurring, then that may affect our exports.”

Last year, Namibia exported 270,000 tons of charcoal worth $72 billion (1.3 billon NAD) mainly to South Africa, which then exports it to other markets, including Europe. Europe is the top destination for Namibia’s beef, with the union consuming about 80 percent of the country’s total exports valued at roughly $23.5 million (420 million NAD).

Namibia is not the only country affected by the new EU regulations. Other countries include Brazil, Cameroon and Nigeria.

Products that are affected by the new EU regulations include cocoa, soy, palm oil and coffee.
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