Powell Speculates On Rates In Jackson Hole

Jerome Powell’s speech can be regarded as his most important of the year.
The highlight of the Federal Reserve’s annual symposium at Jackson Hole will be the chairman’s remarks to financiers and economists.

People will be on the lookout for hints about the direction the Fed is taking interest rates, particularly how big and for how long. Powell will probably emphasize that the Fed will do all it necessary to get inflation down to its aim of 2% despite it being around 9%. The Fed’s rate increases may eventually be able to stop inflation. However, there are worries that they could trigger a recession as a result.

The central bankers’ meeting is the first to be held in person after going online during the COVID-19 pandemic. In just four meetings, the Fed increased its benchmark rate by two full percentage points, to a range of 2.25% to 2.5%, in an effort to combat inflation. Mortgages, auto loans, and other consumer and commercial borrowing costs have increased as a result of these changes.

What is the next step for the Fed? Following the Fed’s July meeting, Powell signaled that the organization might decide to scale back its rate rises after imposing two consecutive historically significant increases of three quarter points in June and July. Fed observers anticipate Powell will provide some guidance on the next steps on Friday. The data from this week add to the puzzle. The government reported on Thursday that the economy shrunk at an annual rate of 0.6%, marking the second consecutive quarter of recession. But employment is still robust, and layoffs are comparatively few.

Due to decreasing gas prices, inflation has begun to ease, but it is still cripplingly high. Powell might also talk about how the pandemic affected the economy’s supply chain and what it might entail for Fed policy on Friday. COVID- Due to 19 shutdowns, there was a lack of both personnel and other components, including semiconductors. Many of those supply problems are still present.

Prior to Chairman Jerome Powell’s speech at the Fed conference in Jackson Hole, U.S. equities futures were trading lower. The main futures indexes point to a 0.3% loss before the opening bell. A great week for oil is imminent. Futures for West Texas Intermediate were trading at about $93. The price of a barrel of Brent crude futures was approximately $100. The highlight of the Federal Reserve’s annual symposium at Jackson Hole will be the chairman’s remarks to financiers and economists.

People will be on the lookout for hints about the direction the Fed is taking interest rates, particularly how big and for how long. Powell will probably emphasize that the Fed will do all it necessary to get inflation down to its aim of 2% despite it being around 9%. The core PCE index, consumer sentiment, and statistics on income and spending will also be of interest to traders. In after-hours trade following the release of quarterly earnings, shares of Gap and Dell declined. In Asia, the Shanghai Composite Index in China fell 0.3%, the Hang Seng in Hong Kong gained 1.0%, and the Nikkei 225 in Tokyo increased by 0.6%. The S&P on Wall Street rose 1.4% to 4,199.12, marking the greatest daily gain in almost two weeks. To 33,291.78 the Dow Jones Industrial Average increased by 1%. To reach 12,639.27, the Nasdaq composite increased 1.7%. as well Thursday. The U.S. economy didn’t contract as much over the spring, according to the government. On an annualized basis, it shrank by 0.6%, which is less than the earlier projection of 0.9%.

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