What will Powell say in Jackson Hole?

Today Jerome Powell will speak from Jackson Hole and there are different expectations between those of a non-intervention, in which he will not say anything, and one instead cautious, but in which he will present the famous tapering, that is the end of monetary expansion.

According to Standard Chartered G10 FX chief Steven Englander, "Fed Chairman Powell will likely cautiously state recent indications from Fed officials that a reduction announcement is likely at the November FOMC meeting." Englander stresses "cautious" because Powell will likely point out that tapering is conditional on economic results that meet expectations; if there is a deviation from this baseline, a December announcement looks more likely than September. therefore the operator expects a soft, accommodating view, according to the trend of the economy.

Also, as Kaplan noted today, Powell is likely to make a distinction between tapering and raising policy rates, which would require more concrete long-term inflation concerns. So Powell would distinguish between lower purchases and higher interest rates, a choice that would require stronger inflationary fears.

Right now, even those who support tapering more actively. like the Dallas Fed, he has become more cautious, declaring that he will not carry out any restrictive maneuvers if the Delta variant makes its weight felt on the economy.

"It is difficult to imagine the Fed committing to a specific reduction timeline in light of the ongoing public health crisis," said Aneta Markowska, a Jefferies economist, of Powell's upcoming speech. The uncertainties are excessive, we do not know what autumn will be like economically, and nobody wants to make commitments and then have to go back on them.

Then there is the problem of the high federal debt and the elephant in Biden's next maneuver room, which make a rate hike rather complex, and not exactly a simple tapering, that is, a reduction in purchases.

So we should see a moderate, if not empty, ad with no real content. Powell will want to keep his hands free to intervene depending on what the future holds.

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The article What will Powell say in Jackson Hole? comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cosa-dira-powell-a-jackson-hole/ on Fri, 27 Aug 2021 07:00:13 +0000.