The upcoming speech by Fed Chairman Jerome Powell, scheduled for August 26, touches upon the potential for tightening the U.S. monetary policy.
A symposium takes place at Jackson Hole, Wyoming. The speech starts at 10:00 am Washington time. Fed officials have already commented on the current economic state. Thus, Powell's possible announcement of a further interest rate hike, due to high inflation in the U.S., remains a cause for concern.
Increased securities yields, compared to June lows, as well as a positive labor market dynamics, may contribute to the monetary ease. However, the publication of data is about to happen in September. Until that, the key rate is estimated to increase by 50 or 75 basis points, which, in turn, would put pressure on economic growth rates.
U.S. Central Bank officials also stressed the need for a rise, given the record high inflation over the past 40 years. Federal Reserve Bank spokeswoman Esther George noted that the possibility of an interest rate hike to 4% cannot be ruled out. Nevertheless, it is too early to give a full assessment, since there is a lack of statistical data.
In fact, Powell's speech is unlikely to cause "a sharp swing in the stock market as expectations are quite high, while exposure remains low," said Dennis DeBuscher, founder of 22V Research.