Fed Chair Powell at Jackson Hole, BoA expect him to pushback against rate cut expectations

<p>Federal Open Market Committee (FOMC) Chair Powell is speaking this week at the Kansas Fed's Jackson Hole symposium.</p><ul><li><a href="https://www.forexlive.com/centralbank/note-for-diary-preview-powell-to-speak-at-10-am-et-on-friday-august-25-jackson-hole-20230817/" target="_blank" data-article-link="true">Note for diary &amp; preview – Powell to speak at 10 am ET on Friday August 25 – Jackson Hole</a></li><li><a href="https://www.forexlive.com/news/previewing-the-week-ahead-in-financial-markets-tldr-version-is-nvda-earnings-vs-powell-20230820/" target="_blank" data-article-link="true">Previewing the week ahead in financial markets. TL;DR version is NVDA earnings vs. Powell</a></li></ul><p>GS is holding low expectations:</p><ul><li><a href="https://www.forexlive.com/centralbank/goldman-sachs-is-not-expecting-a-strong-signal-from-federal-reserve-chair-powell-this-week-20230821/" target="_self">Goldman Sachs is not expecting a strong signal from Federal Reserve Chair Powell this week</a></li></ul><p>Bank of America, on the other hand, are expecting more substantive comments from Powell. Economists at they bank say they expect the tone of Powell's speech "could be less balanced at Jackson Hole given the robust data flow since the July FOMC meeting." </p><p>BoA point to:</p><ul><li>Q2 GDP leaping well above consensus: <a href="https://www.forexlive.com/news/us-q2-advance-gdp-24-vs-18-expected-20230727/" target="_blank" rel="follow" data-article-link="true">US Q2 advance GDP +2.4% vs +1.8% expected</a></li><li>July retail sales, excluding autos, that climbed above expectations: <a href="https://www.forexlive.com/news/us-july-retail-sales-07-versus-04-expected-20230815/" target="_blank" rel="follow" data-article-link="true">US July retail sales +0.7% versus +0.4% expected</a><ul><li>(as a ps., BoA tipped the surge in sales beyond expected: <a href="https://www.forexlive.com/news/all-eyes-on-us-retail-sales-data-due-tuesday-15-august-2023-preview-20230815/" target="_blank" rel="follow">We forecast above-consensus increases of 0.7%</a></li></ul></li></ul><p>And conclude:</p><ul><li>"While the Fed would prefer not to short-circuit the business cycle, policymakers are probably becoming increasingly concerned about a re-acceleration in inflation, driven by strong aggregate demand" </li><li>"Therefore, we expect Powell to push back— implicitly or explicitly— against the degree of rate cuts that markets are pricing for next year."</li></ul><p>Powell to keep on hiking?</p>

This article was written by Eamonn Sheridan at www.forexlive.com.