Powell speaks and DC looks to avoid shutdown

Those who follow markets and policy were all anticipating the speech at the Jackson Hole gathering of Fed officials and economists of Fed Chair Jay Powell. The speech was short and to the point: inflation remains the central banks number one concern, and action to bring inflation down is the focus of Fed policy.

The Chair made several key points; perhaps the most important was a reaffirmation that the Fed should not prematurely stop raising rates and that the Fed will keep at rate increases “until the job is done.”

This is likely the last major policy speech Chair Powell will give before the FOMC meets again on September 20/21. As Chair Powell has been consistent at telegraphing policy and not surprising markets and in my view that was his aim again today. Markets should expect an extended period of higher rates until there is convincing evidence that inflation has been contained.

As he did after the FOMC rate action in July, Powell reiterated his view that rate decision will be data driven, and there is more data to come out prior to the September meeting. However, again telegraphing policy, the only question for FOMC members is whether the increase will be 75 or 50 bps.

Funding the government

While most of Congress and senior government officials are on August break there are so...
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