While the summer is in full swing, the markets continue to monitor the communication of central bankers in Europe and the United States, much less numerous, to try to position themselves as well as possible in relation to future monetary policy decisions.
As every year, the symposium of central bankers in Jackson Hole in the United States will be followed with attention because this meeting has been, depending on the year, the place of important announcements for the presidents of the Fed, in particular at the time of the crisis of the subprime.
For this edition, the markets will necessarily be waiting for indications on the evolution of the pace of monetary policy after more than 500 basis points of rate hikes in record time, and in particular indications on a possible halt to rate hikes, and not just a break, which would finally confirm the “terminal” rate.
But it is quite possible that this edition of the central bankers’ symposium will leave observers a bit unsatisfied. Indeed, the Fed is more “data dependent” than ever at this stage of the monetary normalization cycle. The middle of the Fed’s rate range is already currently at 5.37%, very well above headline inflation and even quite significantly above underlying inflation in the United States (4.80% at the time where we write these lines).
We can therefore consider that this is enough for the Fed to slow down, but the next meeting is not until September (the 19th and 20th), i.e. still more than a month of data that the Fed will be able to collect before take the most appropriate decision, both on the level of rates but also concerning the normalization of the balance sheet (at this stage, 16% of the expansion of the post-Covid balance sheet has been normalized against almost 40% for the ECB)
So why rush to send monetary guidance messages at the end of August when a lot of activity and price data will still reach it afterwards, providing additional decision-making “comfort”?
2023-08-10 06:46:07
#light #Jackson #Hole #symposium #year #Fed
