2023-08-30 15:18:38
The Fed Chairman reiterated some of the messages already conveyed in previous speeches.
Jackson Hole confirms the rather “hawkish” bias on the part of Jerome Powell and the Federal Reserve (Fed). The Fed Chairman reiterated some of the messages already communicated in previous speeches, which might be summarized as follows: the Fed is not yet convinced that inflation is falling towards its target of 2%; Indeed, three conditions are necessary for the Fed to feel reassured: a continued fall in inflation following the good figures for June and July, a fall in growth below potential growth (which does not is not the case so far) and a rebalancing of the labor market. It is therefore likely that we should expect key rates that are at best stable in the coming months and potentially higher in the event of an unpleasant surprise on inflation. He also returned to the uncertainty weighing on the “R-Star” (“equilibrium” or “neutral” interest rate) but without great surprise for the markets, this subject having already been discussed at the beginning of the month of August by several members of the Fed.
Christine Lagarde’s message was more neutral, which is logical given the much less favorable European situation. Some members of the European Central Bank (ECB) then reaffirmed their respective biases, Martin Kazaks and Joachim Nagel rather hawkish and Mario Centeno much more neutral.
Finally, Kazuo Ueda, Governor of the Bank of Japan, recalled that monetary policy would remain accommodating in Japan and that it was not certain that the current inflationary pressures would last.
No big surprises overall, especially in view of the market’s “fears” around a potential rise in the “R-Star” in the United States. The market feared that the Fed would insist on this point, which was not really the case. It should also be noted that Kazuo Ueda was undoubtedly more accommodating than what the markets expected.
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