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25 Aug 2023

Powell avoids out-hawking markets, puts Fed on data-dependent footing

Speaking at the Jackson Hole Economic Policy Symposium this morning, Federal Reserve Chair Jerome Powell delivered a slightly less hawkish message than markets had feared, saying that the central bank would “proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data”. In a speech that recycled a lot of the language used in last year’s appearance, Powell said “Although inflation has moved down from its peak — a welcome development — it remains too high,” and noted “Additional evidence of persistently above-trend growth could put further progress on inflation...

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Trading grinds to a halt as central bankers go off to summer camp

Financial markets are in stasis this morning ahead of a series of monetary policy speeches at the Jackson Hole Economic Symposium. Treasury yields are up slightly and equity futures are licking their wounds after yesterday’s buy-on-rumour, sell-on-news dynamic in Nvidia shares saw the major indexes lose altitude. Trade-weighted measures of the dollar are holding near three-month highs as market participants bet Federal Reserve chair Jerome Powell will deliver a relatively-hawkish “higher for longer” message, followed by a more dovishly-cautious one from the European Central Bank’s Christine Lagarde. Both the euro and pound are oscillating around key technical levels, and modest...

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