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23.08.2023 11:53 AM
What to expect from Powell's speech in Jackson Hole?

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All market participants are sitting on the sidelines of the speech by Federal Reserve's Chair Jerome Powell at the annual symposium held by the central bank of Jackson Hole, Wyoming. He is due to speak on Friday. It goes without saying that financial markets will be riveted to the Fed leader's keynote speech delivered every year. Investors will be looking for clues to further policy moves of the Federal Reserve. Meanwhile, investors are trying to puzzle out whether the US central bank will follow its ongoing hawkish monetary policy and raise the funds rate by another 25 basis points one more time this year or abandon its aggressive monetary tightening.

However, Powell's speech is unlikely to be as powerful this year as it was last year. Jerome Powell's 10-minute speech at Jackson Hole last year rocked financial markets. In his speech, the chairman focused on getting the economy back to price stability, saying it would take some time and also require some pain for households and businesses. He called these measures a dear price to pay to bring inflation down.

Inflationary pressure peaked at 9.1% on year in June 2022 and since then, sank to 3.2% in July of this year. In this context, Powell will speak more calmly. At the same time, the Fed's goal of pushing inflation to 2% remained in place.

Many analysts, including Philadelphia-based Fixed Income Portfolio Manager Jack McIntyre at Brandywine Global Investments Management, say that the Federal Reserve is unlikely to change the game and come up with opposite statements this year. Most likely, Powell's speech will be: "We have done a lot in our monetary policy, but there is still much to be done, and our mission is not yet completed."

The mainstream opinion of most analysts is that the Fed chairman's speech at Jackson Hole this year will be moderately hawkish, and this will be the difference from last year. Powell's speech last year pushed precious metals prices to historic highs. The precious market will hardly respond in this manner this year as well.

Irina Yanina,
Analytical expert of InstaForex
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