I can’t see how he can be anything other than hawkish given the equity market mania driving premature reflation. Goldman sort of agrees.
The Fed’s annual Jackson Hole Economic Policy Symposium takes place on Friday and will open with a speech by Chair Powell at 10am EST. We expect Powell to reiterate the case for slowing the pace of tightening laid out in his July press conference and the July minutes released last week. He is likely to balance that message by stressing that the FOMC remains committed to bringing inflation down and that upcoming policy decisions will depend on incoming data.
We suspect that the Fed leadership saw the easing in financial conditions after the July FOMC meeting—much of which has now reversed—as unhelpful to its task of keeping the economy on a below-potential growth trajectory, but not problematic enough to scrap its plan to slow the pace of tightening. Softer-than-expected CPI and PPI reports since the July meeting should also make the leadership more comfortable proceeding with its plan to slow down.
