Abstract: The U.S. dollar index rebounded after hitting a one-week low after Fed Chairman Powell delivered a speech at the annual meeting of the central bank in Jackson Hole.
Federal Reserve Chairman Jerome Powell delivered his opening speech at the Jackson Hole central bank annual meeting on Friday. The key points of his speech are as follows:
The size of the September rate hike depends on the “overall” data;
To some extent, as the policy stance tightens further, a slower pace of rate hikes will be appropriate;
The long-term neutral expected level of the benchmark overnight rate of 2.25%-2.50% “is not the place for the Fed to stop or pause”;
The U.S. economy is clearly slowing, but the underlying momentum is strong;
Lower inflation data for July is welcome, but not at the level the Fed needs before it is confident that inflation will fall;
The Fed is “purposefully” shifting policy to a level sufficient to limit inflation back to 2%;
Restoring price stability will take some time and will require the “forceful” use of central bank tools;
Lower inflation may require below-trend growth for some time;
There is likely to be some softening of labor conditions and some suffering for families;
The price of lower inflation but no guarantee of price stability is unfortunate;
History strongly warns against premature loosening of policies;
The longer high inflation persists, the more likely it will become entrenched;
We are taking strong and rapid steps to moderate demand, bring it better in line with supply, and maintain inflation expectations, and we will continue to do so until we are confident the work is done.
Earlier, some Fed officials made the following remarks:
Bostic: The data will determine the size of the rate hike, hopefully 100-125 basis points more, and the sooner the better, we should (keep rates high) for a “long period of time.”
Brad: An early rate hike is appropriate.
Harker: We’re going to do everything we can to control inflation, and in terms of controlling inflation, there could be a recession, and if there’s a recession, it’s likely to be temporary, and the number one risk is that inflation expectations get out of hand.
In addition, some ECB policymakers want to discuss raising interest rates by 75 basis points next month as the inflation outlook deteriorates, according to sources.
At the same time, the dollar index fell to 107.60 in the short-term and then recovered, and the dollar/yen fluctuated sharply in the range of 136.20-137.30.
US dollar index 1 hour chart
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