While politics may have preoccupied the market for most of this week, the focus for the next couple of days may well turn back to monetary policy with the Fed’s annual Jackson Hole symposium due to kick off today and continue into the weekend, suggests the research team at Deutsche Bank.
Key Quotes
“As a reminder, the topic of this year’s conference is the rather vague “Changing Market Structure and Implications for Monetary Policy” and Fed Chair Powell is due to speak this afternoon at 15.00pm London time on the even more vague “Monetary Policy in a Changing Economy”.”
“While the title of Powell’s speech gives few clues away, our US economists believe that he is unlikely to move market expectations in either a more hawkish or dovish direction. That said, he could discuss some market relevant topics, including: uncertainty around estimates of the natural rate of unemployment; the potentially flatter Philips curve; the outlook for inflation; the ongoing balance sheet runoff process; changes to how monetary policy is implemented by the Open Markets Desk (i.e. floor versus corridor system); macroprudential regulatory adjustments (e.g. countercyclical capital buffer, or CCyB); or changes to the Fed’s monetary policy framework (e.g. price level targeting). So worth keeping an eye on.”
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