Fed Chairman Jerome Powell is expected to deliver a speech at the Jackson Hole Economics Symposium tomorrow at 17.05 (UTC 14.05).
So what will be the content of this speech? Analysts shared their thoughts on the content of the speech in the estimates they released today.
Fed Chairman Powell's Jackson Hole speech is unlikely to introduce new elements into the US monetary policy outlook, says Julian Brigden of Macro Intelligence 2.
“They will continue to hold the trump card because they don't want to loosen financial conditions,” Brigden said.
“While they emphasize that they will not cut rates anytime soon, they will probably continue to hold some sort of trump card in the form of another 25 basis points hike.”
Brigden expects inflation to remain above target and leave no room for a dovish stance. The analyst noted that investors have yet to realize that the concept of “higher interest for longer” means “a longer period of time than the concept of longer duration that the markets have had so far”.
In addition, BNP Paribas analysts also announced their predictions about the content of tomorrow's speech. Here are the headlines from the report they published:
“Fed Chairman Powell will speak at a conference in Jackson Hole where policymakers can discuss fundamental changes in the global economy and their potential impact on policy-related variables, including the neutral interest rate.
We believe officials, in our view, are moving towards a higher neutral rate estimate than the current FOMC median of 2.5%. The June dot plot showed more movement in this direction, although Powell said it was “hard to know” where rates would sit, and New York Fed President Williams, creator of the widely accepted neutral rate model, predicted conditions had changed little compared to pre-pandemic conditions.
After a 525 basis point rate hike and inflation moving positively, authorities could close the gap by considering the potential for higher neutral rates, while still solving this problem by maintaining restrictive interest rates for a longer period of time.
As for whether inflation targets need to be changed, we think central bank officials will generally agree that it is not yet time.”
*Not investment advice.