7:18 am ET, Aug. 25, 2023
Could Fed Chair Powell’s Jackson Hole speech send stocks plummeting again?
As Federal Reserve Chair Jerome Powell spoke around this time last year At the Kansas City Fed Symposium in Wyoming, he warned that rate hikes would mean “pain” for US budgets. The Dow Jones Industrial Average Index fell 1,000 points In Answer.
Will history repeat itself?
Some investors expect Powell to reiterate the Fed’s commitment to curbing inflation while acknowledging progress made.
But the market is unlikely to react quite as dramatically this time, they say, in part because Powell’s speech will likely be similar to the type of comments he made following recent policy meetings.
“Expect a balanced view with no abrupt tightening measures, but not mission accomplished: the Fed has not come to the point of letting inflation spiral out of control,” strategists at Evercore ISI wrote in a note Tuesday.
Although it is unclear whether The Fed will hike rates again This year, Powell has announced at least one more surge – On Wall Street, the central bank’s aggressive rate hike campaign has come to an end In its sights. This is a crucial difference from last year.
“By August 2022, Powell knew the Fed still had several rate hikes ahead of it. Today the Fed could be nearing the end of this rate hike cycle. To do that, he’ll need to be much more sophisticated in his speech,” said Tom Graff, Facet’s head of investments.
According to the CME FedWatch Tool, traders see about an 85% chance that the Fed will hold rates steady at its next September meeting. Expectations on whether the central bank will pause or raise interest rates for the remainder of the year are more divided, with slim majorities calling for no change in November or December.
Comments are closed.