Jerome Powell talk
On Friday, Powell is scheduled to speak at the Economic Policy Symposium at the Federal Reserve Bank of Kansas City. Investors will be looking to the highly anticipated speech for clues about the outlook for interest rates, which the Fed raised last month to a range of 5.25% to 5.5%, the highest level in 22 years.
Fed officials are deeply divided on the path of interest rates
There may be some talk about the neutral interest rate — or r-star — which is the “break-even” interest rate that neither stimulates nor dampens economic activity, according to Lorraine Goodwin of New York Life Investments.
Goodwin added: “The idea that investment and thus potential economic growth could pick up, as a result of climate change or the digital infrastructure required for AI, could be seen as a hard line, as it suggests that the policy rate could stabilize at a higher level.”
Meanwhile, Evercore’s Krishna Guha said Powell will likely focus on the short-to-medium-term outlook – and avoid any talk of a neutral interest rate.
Guha added: “Expect a balanced assessment without a sudden tightening, but without a mission accomplished: The Fed has not gone so far as to let inflation escape its grip. If we are right, Treasury yields could end the week lower, not higher – than It boosts stock movement.
2023-08-22 22:49:20
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