Summary:
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Powell sets conditions on further rate hikes
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Central banker is confident that Fed will respond properly to any shift in inflation expectations
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US dollar index (USDIDX) deepened its slid following the speech while stocks moved higher
The main event of the day - Jerome Powell’s speech at Jackson Hole symposium - is already behind us. The central banker did little to help the greenback but at same time boosted stocks. In turn US500 may be eyeing a retest of the recent fresh ATH.
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The US dollar index (USDIDX) slumped in the aftermath of Powell speech. Source: xStation5
Probably the most awaited speech of this year’s Jackson Hole meeting has been viewed to be a bit dovish. Jerome Powell expressed that the current Fed approach of gradual rate hikes seems “appropriate” in case the economic growth remains strong. The Fed Chair continued saying that he sees good reasons to expect that such growth will be achieved in the nearby future and that at this point there is no evident risk of overheating the economy. He once hailed the US labour market by saying that those who seek and want the job can find one. It looks like he has also addressed the concerns that the Reserve is tightening its policy to quickly as he explained that the gradual rate hike path navigates the risk of moving forward too slowly or too quickly. And while he said that there are no clear signs visible of price growth accelerating beyond Fed’s target he also added that he is confident that the central bank will do what it takes to address any shift in the inflation expectations properly. As one can see Powell included some conditions on the further rate hikes and because of that the speech was viewed to be softer than remarks from other Fed members speaking at Jackson Hole.
US500 got boosted as USD deepened its slide. The benchmark sits less than 10 pts below the ATH at 2874 and may be set to test this handle in the latter part of today’s session. Source: xStation5
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