23 August 2024
If you are covering Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium today, please find a comment below from Sacha Chorley, portfolio manager at Quilter Investors:
“In his highly anticipated speech at the Jackson Hole Economic Symposium today, Federal Reserve Chair Jerome Powell delivered a message that has been eagerly awaited by investors and market watchers. Powell provided the clearest indication yet that the central bank is poised to begin cutting the historically high interest rates as early as September. This dovish signal aligns with market expectations, which have already largely priced in a September rate cut.
“Powell reiterated that the path to a soft landing is still very possible, reflecting similar concerns about slightly softer employment data and the need to get ahead of the slowdown to guide the economy to this soft landing. There is more confidence that inflation is coming down sustainably, reducing pressure from that standpoint.
“Explicitly signalling that ‘the time has come for policy to adjust’, Powell’s comments make us more confident that a cut in September is likely. His remarks, such as ‘the economy continues to grow at a solid pace’ and ‘the timing and pace of rate cuts will depend on incoming data’, along with recent commentary from other FOMC members however chimes with our doubt that this will be a jumbo 50bps cut.
“An interesting comment at the end of the speech highlighted potential volatility as we approach elections, especially if Republicans look like the winners. Powell noted that “disinflation while preserving labour market strength is only possible with anchored inflation expectations,” effectively warning that higher (unfunded) spending could upset that anchoring and cause issues for the Fed.”
