In Jackson Hole, Fed boss faces public enemy No. 1 inflation – zimo news


A year ago, Federal Reserve Chairman Jerome Powell assured at the annual meeting of central bankers in the western United States that price increases were “temporary.” But this year in Jackson Hole, inflation is public enemy number one.

“Jerome Powell’s speech last year is outdated, to say the least, and that’s probably what the Fed chairman was thinking about when preparing his speech,” said Tom Dooy, chief economist at SGH Macro Advisors on Friday.

As in previous years, but more importantly, a speech by the U.S. central bank governor scheduled for Friday at 2:00pm GMT is the focus of the Jackson Hole (Wyoming) symposium for the first time since 2019 Second-rate.

As global economies grapple with accelerating prices threatening growth, Powell “will insist that the Fed will do everything it can to control inflation, even if that means raising interest rates. Interest in restrictive areas”, that is to say at the risk of Mr. Duy telling French Society added.

Inflation in the US jumped to 8.5% (CPI) in a year, near the highest level in four decades. The Fed is aiming to bring it back to around 2%.

The Fed is also looking at the PCE index, which is based on consumer spending, with a new version due shortly before Powell’s intervention on Friday. This measure of inflation came in at 6.8% year-on-year in June.

To cool this price overheating, the Fed has since last spring raised the overnight rate, which affects all other credit, from zero to a range of 2.25% to 2.50%. It should be at least 3.8% next year, according to the Fed’s latest average forecast dating back to June.

James Bullard of the Federal Reserve Bank of St. Louis (Missouri) sees rates at 4% by the end of the year, he told CNBC on Thursday at Hill Station.

Despite these prospects for monetary tightening, stocks have rallied this summer, believing that the possibility of an imminent recession will convince the Fed to turn to easing fairly quickly next year.

– more work –

Tim Duy said Fed members one by one insisted that the fight was far from over and that markets, which had tumbled this week, were “starting to hear the message.”

Esther George, president of the Kansas City Fed, host of the Jackson Hole meeting and voting member of the Monetary Committee, told CNBC on Thursday that “there is still work to be done” and that to see a “convincing trend” in price declines “at least one needs to be done” three-month slowdown.”

If, as Adam Posen, director of the Peterson Institute for International Economics puts it, “there is no uncertainty about the path of monetary policy over the next four to six months,” then the problem is in the details.

Will the next rate hike on September 21 be half a percentage point or three-quarter percentage point? Markets are changing their bets almost every day. As of Thursday night, 62.5% of investors were betting on a 75 basis point rise, according to CME Futures calculations.

“Mr Powell will send a clear message that rates are rising, but he will also be more humble than last year and insist that it all depends on the data,” warned Tim Duy of SGH Macro Advisors.

For Gregori Volokhine, portfolio manager at Meeschaert Financial Services, the Fed will still “try to let investors go.” “We must not forget that we are very close to the midterm elections in November” and that she “is afraid of being blamed for the recession.”

“The Fed is a bit like walking on eggshells. What is needed is to break the inflation neck, but there is still a long way to go,” concluded market watchers.

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