OPINION
Market Rating Before FOMC MeetingJan 31
Hawkish Expectations Rose After Jackson Hole Symposium
The Jackson Hole meeting, which took place between August 25 and 27, caught the attention of the global markets.
Jerome Powell, the chairman of the US Federal Reserve (FED), was closely watched during the symposium by central bank representatives from more than 40 countries, as well as academics, professionals, and members of the media.
The labor market was quite strong but unstable, according to Powell's report. The U.S. economy, he claimed, has slowed down, but it still maintains a solid underlying momentum. Powell pointed out that the rising inflation is spreading and it is more likely to be permanent as long as it stays long. He said that while the decline in inflation from its 41-year peak in July was welcomed, it should also be comforting.
In this regard, the FED Chairman stated that rate hikes at the September monetary policy meeting will be determined by incoming macroeconomic data. He warned that interest rate hikes could be painful for the economy, citing the importance of using his tools aggressively to keep demand and supply in balance.
Despite expectations that FED Chairman Powell will make moderate statements to central banks to slow the pace of monetary tightening due to recession fears, hawkish expressions and strong pressure on relatively risky assets were observed at the symposium.
On the other hand, the statements of some of the FED's top officials were closely monitored. Philadelphia Fed President Patrick Harker stated that a methodical approach to a restrictive stance is required. Raphael Bostic, President of the Atlanta Fed, stated that they must reduce inflation and will do whatever it takes to do.
At the meeting, Cleveland FED Loretta Mester announced that she does not foresee a recession for the time being and that they will continue with determined steps to reach the inflation target. St. Louis Fed President James Bullard stated that they should act quickly in the face of rising inflation and increase the policy rate to 3.75-4 percent by the end of the year.
As a result of this, markets began to price in expectations that the FED would not rule out another 75 basis point interest rate hike at the September monetary policy meeting. Indeed, the CME anticipates an interest rate hike of 61 percent daily and 55 percent to 75 basis points weekly for the September meeting.
FED Officials are very determined to reduce high inflation rates despite the recession risks. This is the most important factor that carries the dollar index to the highest level in 20 years with 109.21 on the new trading day. On the other hand, the SP500 index, which is the leading indicator with sales exceeding expectations on Friday, fell to 4 007 points, the lowest in a month, with depreciation of approximately 5%. Bitcoin has dropped to its lowest level since July 13th, at $ 19 474. Finally, an ounce of gold erased a month's gains with 1720 dollars.
Jerome Powell, the chairman of the US Federal Reserve (FED), was closely watched during the symposium by central bank representatives from more than 40 countries, as well as academics, professionals, and members of the media.
The labor market was quite strong but unstable, according to Powell's report. The U.S. economy, he claimed, has slowed down, but it still maintains a solid underlying momentum. Powell pointed out that the rising inflation is spreading and it is more likely to be permanent as long as it stays long. He said that while the decline in inflation from its 41-year peak in July was welcomed, it should also be comforting.
In this regard, the FED Chairman stated that rate hikes at the September monetary policy meeting will be determined by incoming macroeconomic data. He warned that interest rate hikes could be painful for the economy, citing the importance of using his tools aggressively to keep demand and supply in balance.
Despite expectations that FED Chairman Powell will make moderate statements to central banks to slow the pace of monetary tightening due to recession fears, hawkish expressions and strong pressure on relatively risky assets were observed at the symposium.
On the other hand, the statements of some of the FED's top officials were closely monitored. Philadelphia Fed President Patrick Harker stated that a methodical approach to a restrictive stance is required. Raphael Bostic, President of the Atlanta Fed, stated that they must reduce inflation and will do whatever it takes to do.
At the meeting, Cleveland FED Loretta Mester announced that she does not foresee a recession for the time being and that they will continue with determined steps to reach the inflation target. St. Louis Fed President James Bullard stated that they should act quickly in the face of rising inflation and increase the policy rate to 3.75-4 percent by the end of the year.
As a result of this, markets began to price in expectations that the FED would not rule out another 75 basis point interest rate hike at the September monetary policy meeting. Indeed, the CME anticipates an interest rate hike of 61 percent daily and 55 percent to 75 basis points weekly for the September meeting.
FED Officials are very determined to reduce high inflation rates despite the recession risks. This is the most important factor that carries the dollar index to the highest level in 20 years with 109.21 on the new trading day. On the other hand, the SP500 index, which is the leading indicator with sales exceeding expectations on Friday, fell to 4 007 points, the lowest in a month, with depreciation of approximately 5%. Bitcoin has dropped to its lowest level since July 13th, at $ 19 474. Finally, an ounce of gold erased a month's gains with 1720 dollars.
