Inflation Speculation Looms Ahead of Fed Chair Powell’s Speech at Jackson Hole Summit

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The annual Jackson Hole Economic Symposium, which brings together prominent central bankers and finance ministers from around the world, is being closely monitored this year as investors listen for taper talks.

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The Fed’s Jackson Hole symposium will be held virtually on Friday, with many central bank speakers making comments to the media beginning today. Chairman Jerome Powell is scheduled to make a speech at 10 a.m. Eastern time Friday, with investors listening in for any clues as to when the central bank will start pulling back its program of buying at least $120 billion of bonds per month, according to CNBC.

Economic growth seems to have peaked as the Delta variant continues to surge, reported Barron’s, with varying opinions on the state of the economy from members of the Fed committee. “If there’s no clear signal coming from the committee, then there’s no clear signal that Powell can give at this stage. And markets like clear signals much more than delicate nuance,” James McCann, economist at Aberdeen Standard Investments, told Barron’s.

For Powell’s Friday speech, Barron’s noted that market strategists and economists across Wall Street expect some discussion surrounding the reduction in the emergency bond-buying program to stave off inflation. Meanwhile, some think taper plans may be put off due to the spreading variant slowing down the return to the office and hiring, as well as limiting production and worsening supply constraints.

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Strategists are also divided on how the market will respond to Powell’s speech on Friday; however, Barron’s reports that most say volatility is likely. Chris Watling, CEO and chief market strategist at Longview Economics, told CNBC on Thursday that he believes Powell’s statement will be “a little bit more dovish than the market expects.”

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Last updated: August 26, 2021