Fed Chair Jerome Powell’s speech on Friday 22 August at the Jackson Hole economic conference was supposed to be the event of the week and, indeed, it had consequences for financial markets. By focusing on the downside risks on employment, Powell paved the way for a cut in key rates on 17 September.
Powell’s comments could be seen as bringing some ‘summer relief’ as he spoke of resilient US economic activity, a strong earnings season with positive forward guidance, a cooling of trade tensions, and hopes on the geopolitical front.
As is often the case, economists responded with differing views. Some saw Powell’s speech as dovish, justifying a rebound in equities – with the Dow Jones index hitting a new record high – and a decline in US bond yields. Others believed his tone appeared hawkish. The assessment of various available artificial intelligence tools was that the tone was neutral.
