Fed Chair Jerome Powell has delivered a hawkish message in his speech at the Jackson Hole Economic Symposium. Powell said the Fed is prepared to raise rates further if needed, inflation remains too high, and there is substantial further ground to cover. He also said the fact that the jobs market isn't cooling as expected requires attention,
The immediate read through of the speech is that it is a pushback against any notion the market might have that below 3% inflation is simply good enough. Note the use of the wording, Powell said that there is "substantial' further ground to cover. He added that two months of good data are only the beginnings of what's needed and the central bank intends to hold rates restrictive for as long as necessary to ensure inflation is moving sustainably back to 2%.
In the lead up to this speech, there was a lot of discussion as to whether it would linger on neutral policy, but there turns out to be just one mention - that the Fed can't be certain where neutral is.
- UBS Strategy
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