.. Firm statements from three federal officials!
Global markets and Bitcoin are awaiting a speech by the Chairman of the Federal Reserve, Kevin Warsh, today in Jackson Hole. Despite conflicting statements from Federal officials about the path of inflation and interest rates, investors are watching closely for Warsh’s message on the direction of monetary policy and inflation. Federal officials disagree on the future of U.S. inflation: some believe rate hikes are necessary to curb price pressures, while others do not see an urgent need to tighten monetary policy, increasing uncertainty about the future of interest-rate policy.
Speech timing
Waller is expected to speak at 5:00 p.m. Turkey time at the annual Jackson Hole Economic Policy Symposium in Wyoming. The speech is of particular importance because it will be Waller’s first Jackson Hole meeting as Fed chair.
Possible scenarios:
- If Waller uses phrases such as "inflation is still the biggest risk" or "the current interest rate level isn’t restrictive enough" or "we need more progress on inflation before cutting rates," this would be considered a hawkish tone. In this case, the dollar is expected to strengthen and U.S. bond yields to rise, while Bitcoin and gold face downside pressure.
- If he says that "the inflation trend is declining" or that the "current interest rate level is sufficiently restrictive" or that we "need to see the delayed effects of the current policy," then this will be considered a dovish message. In this scenario, expectations for a September rate cut may be strengthened again; the dollar and bond yields could fall, while Bitcoin and gold could rise.
Statements from three Fed officials:
1. Austan Goolsbee (Chicago Fed President): He told Reuters that his biggest short-term concern is not getting inflation under control. Despite being one of the more dovish figures at the Fed, he said that inflation is still far above the 2% target, and that higher energy prices and tariffs could create new inflationary pressures, even though the inflation direction over the past three months is "not concerning." He stressed that a rate cut would only be possible if convincing data show inflation actually moving toward 2%. Experts believe his remarks mean that "the door to a rate cut isn’t closed, but there isn’t enough confidence to cut right now," which is considered a hawkish tone compared with his previous dovish expectations.
2. Jeffrey Schmid (Kansas City Fed President): He said inflation is still stubborn and persistent, and that the Fed must continue looking for ways to bring it back to the 2% level. He told CNBC that the current interest rate, which the Fed kept in the 3.50%-3.75% range in July, does not appear to be restrictive, saying, "I don’t know what I would be restricting with the current interest rate policy." He has recently supported raising rates to bring inflation back to target.
3. Beth Hammack (Cleveland Fed President): She is among the Fed’s most prominent hawks and told CNBC that inflation has remained above the Federal target for more than five years and that monetary policy has not yet curbed the economy. Hammack was one of three officials at last month’s Federal Open Market Committee meeting who preferred raising the rate instead of cutting it. She said: "The time is right to move."
(Note: This content is not investment advice)