Jackson Hole speech is here — what Powell told investors?

YEREVAN (CoinChapter.com) – Federal Reserve Chairman Jerome Powell spoke at Jackson Hole annual symposium on Aug 26, 10 am ET, scaring risk investors with his hawkish tone.

Powell at Jackson Hole symposium

Notably, the latest FOMC meeting already approved a three-quarter point interest rate hike. It is designed to slow down the economy and tackle the growing inflation. In fact, the slow-down rang recession bells for the U.S. economy.

Powell gave a super hawkish stance, raising anticipations that the Fed would raise the benchmark lending rates by 0.75 basis points. The outlook comes ahead of a key employment report on Sep. 2, and the August data on the consumer price index (CPI), coming out on Sep. 13.

Also read: It’s Official: The Euro Falls Below Parity With The US Dollar.

What do the experts think?

David Page, head of macroeconomic research at AXA Investment Managers, commented on the importance of Powell’s overall tone during the meeting.

I think he came across as slightly too dovish, not hawkish enough in July. I think he wants to avoid that now, with markets expecting him to be relatively hawkish. … It’s a very difficult game. It’s a game of expectations. … It becomes a fine tune issue.

said the expert.

Furthermore, the expert noted that the Chair would have to work a “narrow” corridor between not seeming too dovish and not pitting the economy into recession. Michael Gapen, the chief U.S. economist at Bank of America, called Powell’s stance a “lower for longer” policy.

Compared to that, this is going to sound super hawkish. I think that will be the message – we’re going to slow down at some point. We’re tightening, but don’t expect a quick shift to cuts.

commented the executive.

Further comments will be available after the aforementioned speech.

Update:

Jerome Powell takes a hawkish stance, in tune with expectations. The Chair asserted that the central bank’s job on lowering inflation is not done, suggesting that the Fed will continue to aggressively raise interest rates to cool the economy.

While the lower inflation readings for July are welcome, a single month’s improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down.

Powell commented.

Powell added that in current circumstances, with inflation running far above 2 percent and the labor market extremely tight, “estimates of longer-run neutral are not a place to stop or pause.” He also warned that the average households might feel further pain, as the interest rate increase continues.

These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.

asserted the Chair.