Today we will discuss, US Fed chair Jerome Powell speech at Jackson Hole Symposium and cues leading to US FOMC meeting outcome on 21-Sep-22. Here are some of the key points from his speech on 26-Aug-22.
• Powell: Will require restrictive policy for some time.
• Powell: September rate action will dependent on upcoming economic data.
• Powell: Lower July inflation data is welcome, but not enough to change view.
• Powell: Need some more evidence before of inflation cooling off.
• Powell: overall inflation target remains at 2% for long term sustainable growth.
• Powell: Restoring price stability will take some time.
• Powell: History cautious against prematurely loosening policy.
Equichain Wealth Advisors: View & Opinion
Before we share out view, we would like to highlight the rally which started from 17-Jul-22 to 18-Aug-22 was based on narrative that US Fed will manage soft landing and corporate earning will not be hurt as much earlier anticipated in May & June 2022.
Today’s speech highlight was reference to history, which clearly says that early reversal of policy path could prove to be more disastrous. Like US Fed waited too much to reverse easy monitory policy unless US Fed see’s clear sign of inflation cooling down, US Fed will continue its tight monitory policy.