Washington CNN Business  — 

Federal Reserve Chairman Jerome Powell will face his most serious test in the job yet when he speaks Friday at the annual economic powwow in Jackson Hole, Wyoming. He is facing tremendous political pressure from President Donald Trump, and expectations from many investors, to deliver more rate cuts.

Powell will need to assure markets — which appear to have already assumed another rate cut will come in September — that the Fed will do whatever it can to support the economy amid growing fears of a US slowdown. At the same time, he can’t overpromise and risk further turmoil.

“He has to be careful,” said Nathan Sheets, chief economist at PGIM Fixed Income and a former Treasury Department official in the Obama administration. “On one hand, he’s has to say, ‘If things go bad, we’ll be there.’ On the other hand, he can’t promise more than he can deliver right now.”

Powell’s speech comes as Trump has dialed up his demands for the Fed to aggressively cut rates. He has argued the “economy would be even better” if the Fed lowered rates by at least 100 basis points over time —a move usually reserved only for a serious economic downturn — to help the United States compete against other countries where rates are lower, namely Germany.

“The Economy is doing really well,” Trump tweeted on Thursday. “The Federal Reserve can easily make it Record Setting! The question is being asked, why are we paying much more in interest than Germany and certain other countries? Be early (for a change), not late. Let America win big, rather than just win!”

A lot has changed since policymakers met in Washington just three weeks ago. Tensions between the United States and China ratcheted higher as Trump threatened a third bundle of tariffs on $300 billion of goods on Beijing, only to partially pull back some of those levies that were set to go effect on September 1. Economic data from China and Germany have disappointed. And financial markets shuddered as the yield on the 10-year Treasury note fell below the two-year yield for the first time since 2007, a leading indicator of a looming recession.

Powell leads the Federal Open Market Committee, a group of policymakers within the Federal Reserve that meets to set rates, among other things. Members of the FOMC, almost like the Supreme Court, cast votes on different policy options. Their formal mission is to strike a balance: to keep the job market humming, without overheating the economy and causing inflation. It’s the chair’s job to steer the group.

“The most important thing for Powell is he’s not the dictator of the Fed,” said Brian Rose, senior American economist at UBS Global Wealth Management. “He needs to try to build a consensus on what to do next, so he doesn’t want to get out too far, and say things that other FOMC members won’t agree with.”

At their most recent meeting, committee members appeared to be divided about whether to cut rates by as much as 50 basis points, or to keep them steady. Ultimately, they voted 8-2 to lower the federal fund rate by 25 basis points. It was the first cut since the 2008 Great Recession. Two members — Boston Fed President Eric Rosengren and Kansas City Fed President Esther George — disagreed with the move.

“We’ve added accommodation and it wasn’t required in my view,” George said in an interview on Thursday with CNBC’s “Squawk Box,” pointing to the country’s very low unemployment rate and rising wages.

The challenge facing Fed officials is there are still signs the US economy is on solid ground even as inflation has struggled to meet the central bank’s target of 2%, the level it considers healthy for the economy. Meanwhile, trade tensions with China continue to escalate and signs of a global slowdown persist.

“Whether they begin to spill over in a way that we see the effects on the real economy, that is what I’m watching for,” said George.

It will be up to Powell to thread the needle between the markets and his committee.

Most analysts anticipate that Powell will reiterate his prevailing message that the committee is trying to maintain flexibility amid heightened uncertainty, and that it will rely on incoming data to show the true impact of Trump’s trade war on the real economy.

However, some analysts have suggested Powell could walk back comments made last month that July’s rate cut was only a “mid-cycle adjustment.” Others are hoping Powell will emphasize the risks to the global economy and thus open the door for further rate cuts.

“Regardless of what Powell does, he will be criticized,” said Edward Moya, a senior market analyst at New York-based OANDA, which provides market analysis and research.