Fed: Powell reminds that further hikes are possible

In Short

Chair Powell’s speech at the Jackson Hole did not provide many surprises and was widely a recap of the latest data and a reminder that it is too early to declare victory on inflation and start considering policy easing. Core inflation has come down from the peak, but two months of positive data are not enough and anyway at 4.3% year on year it remains some 2pp higher than the target.


  • Today’ Jackson Hole speech allowed chair Powell to cautiously add a slightly hawkish touch to main messages conveyed since July. Inflation is receding but still too high and may require further rate hikes and/or a longer period of tight policy.
  • He pointed to upside risks to inflation stemming from still above trend growth and a still tight labour market. However, he also acknowledged the high uncertainty on the actual stance of monetary policy and the size of the policy lags. Therefore, the FOMC keeps refraining on any commitments.   
  • We think the hawkish tilt was mainly meant to dash residual hopes of swift rate cuts. We stick to our view of no more rate hikes, but we move to Q2 the date of the first cut. Only surprisingly strong readings in the next employment and CPI reports would warrant a rate hike in September. 

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Fed: Powell reminds that further hikes are possible

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