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In this article:
Key Takeaways of Powell’s speech at Jackson Hole, WY
Fed Speak: Highlights from this weeks Fed Governors interviews
Federal Reserve Chair Jay Powell is the person at the Fed that speaks on behalf of the consensus view of the Fed Governers. The Fed Governers over the last couple of weeks have been making comments that parallels Powell’s comments at Jackson Hole on 8/26/2022.
Chair Powell’s speech was well covered by the press, so this will be brief.
HIGHER RATES TO CAUSE PAIN FOR US HOUSEHOLDS/BUSINESSES
`OVERARCHING FOCUS’ IS TO GET INFLATION DOWN TO 2%
WILL LIKELY REQUIRE RESTRICTIVE POLICY FOR SOME TIME
HISTORY CAUTIONS AGAINST `PREMATURELY’ LOOSENING POLICY
He repeated the “unconditional” commitment to bring inflation down, referencing historical lessons to demonstrate what they don’t plan to do: cut rates in the middle of a recession with inflation still above their 2% target.
Below shows how the markets implied Fed rate path has been priced on the respective recent dates. Fed’s actual rate path is in solid white. This shows that the implied path has thought rate cuts may likely happen during 2023. The Fed Chair and Governors have been recently implying a different path than what is seen in the dotted white and its respective history in gold.
Welcome to Fed Speak!
I’ll be publishing a Fed Speak series, likely weekly, within the “Your Christmas Wish List.” This will cover some key highlights of recent speeches and interviews of the Fed Governors going forward. It’ll outline key takeaways regarding their communications.
Below is Bloomberg’s Fed Spectrometer. Ranks the Governors from dovish to hawkish. It’s a subjective assessment of the Governors policy inclination based on public statements.
During the week ending 8/27/22…
CLEVELAND FED PRESIDENT LORETTA MESTER SPEAKS ON YAHOO FINANCE
WANT TO SEE INFLATION ON `SUSTAINABLE DOWNWARD TREND
PREMATURE TO THINK THAT INFLATION HAS PEAKED
FED TO RAISE RATES UNTIL EVIDENCE OF INF. EASING SEEN
UNEMPLOYMENT RATE LIKELY TO MOVE UP FROM CURRENT LEVEL
GROWTH WILL BE BELOW TREND FOR A WHILE
CLEVELAND FED PRESIDENT LORETTA MESTER SPEAKS ON BLOOMBERG TV
MAY HAVE TO MOVE RATES ABOVE 4%, HOLD THEM THERE IN '23
WE'RE STILL IN NEGATIVE REAL RATES; HAVE TO MOVE UP
WANT TO AWAIT DATA BEFORE DECIDING ON SEPT. RATE SCOPE
NEED TO SEE A LOT MORE CONVINCING EVIDENCE INF. EASING
ATLANTA FED PRESIDENT RAPHAEL BOSTIC SPEAKS ON BLOOMBERG TV
SAYS FED SHOULD STAY AT HIGHER RATES `FOR A LONG TIME'
LOOKING FOR 100 BPS-125 BPS MORE THAN WHERE WE ARE
WANT TO SEE POLICY GET TO MARGINALLY RESTRICTIVE REGION
I'D BE COMFORTABLE WITH SOME WEAKNESS IN LABOR MARKETS
INFLATION TOO HIGH, WILL DO WHAT'S NEEDED TO BRING DOWN
IF DATA IS STRONG, I'LL LEAN TOWARD 75 BPS SEPT. HIKE
IF DATA IS SOFTER LIKE PCE TODAY, I LEAN TO 50-BP HIKE
PCE today. First negative result since April 2020.
ST. LOUIS FED’S JAMES BULLARD SPEAKS IN INTERVIEW ON CNBC
FED'S BULLARD SAYS HE LIKES IDEA OF FRONT-LOADING RATE HIKES
REPEATS HE FAVORS GETTING RATES TO 3.75%-4% THIS YEAR
MARKETS UNDERPRICING RISK INFLATION IS MORE PERSISTENT
FED MAY HAVE TO BE HIGHER FOR LONGER
PHILADELPHIA FED’S PATRICK HARKER SPEAKS IN INTERVIEW ON CNBC
NOT DECIDED YET ON 50 OR 75 BPS AT SEPT. FOMC
WOULD LIKE FED RATES ABOVE 3.4%, THEN MAYBE SIT AWHILE
FED NEED TO RAISE RATES TO RESTRITIVE STANCE
ESTHER GEORGE SPEAKS IN INTERVIEW ON BLOOMBERG TV
NOT OUT OF QUESTION THAT FED WOULD HOLD RATES ABOVE 4%
FED RATES CURRENTLY NOT AT A RESTRICTIVE SETTING
SHOULD RAISE RATES UNTIL EVIDENCE INFLATION COMING DOWN
FED HAS TO GET RATES HIGHER TO SLOW DOWN DEMAND
MINNEAPOLIS FED’S NEEL KASHKARI COMMENTS DURING EVENT
LOWER OIL WELCOME BUT I’M FOCUSED ON UNDERLYING TREND
VERY HIGH INFLATION RISKS DE-ANCHORING EXPECTATIONS
INFLATION IMPACT OF STRONG USD MAY AFFECT FED POLICY
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Charts, news, and/or data sourced from Bloomberg Professional unless otherwise noted.
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