The Federal Reserve’s (Fed) resolve to maintain the downward trajectory of the US inflation was reiterated at the Jackson Hole symposium. Fed Chair Jerome Powell stole the headlines announcing that “pain” was likely going to be experienced in this process. Otherwise, though, his speech broke no new ground.
The constantly reiterated refrain from all Fed governors continues to be that inflation is unacceptably high. The more interesting message is that policymakers want to maintain policy rates in a restrictive stance for an extended period of time, allowing inflation to come down gradually. As monetary policy acts with a lag, the effect of the rate hikes, and higher Treasury and market yields are already going to have a further tightening effect.
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