US Fed chair at Jackson Hole: What to expect from Jerome Powell's speech today?

livemint.com:

Emkay Global Financial Servicestold Mint. While nobody knows what Powell will say today, his speech may have a hawkish tone. The Fed is expected to take into account the recent macroeconomic trends which show the US labour market remains tight and inflation still significantly above its 2 per cent target.

V K Vijayakumar, Chief Investment Strategist atGeojit Financial Servicesunderscored that the US economy is exhibiting strength with GDP growth around 2 per cent, consumer inflation at 3.2 per cent and unemployment at 3.5 per cent. "The trends in these important indicators will be watched by the Fed and its message will be influenced by the latest data on these macros. The Fed is unlikely to sound dovish," said Vijayakumar.

Deepak Jasani, Head of Retail Research, HDFC Securities pointed out that at the same gathering last August, Powell famously warned the US may need to enter a “lengthy period of very restrictive monetary policy" that will “bring some pain," sending the market — long accustomed to a friendly Fed and lower interest rates — into a tizzy. He feels the market may not be prepared for a hawkish Fed. "Markets may be ill-prepared for a hawkish message from Powell.

The recent strength in the US economy would probably increase policymakers’ concerns about a reacceleration in inflation. We, however, feel that Powell may take a noncommittal strategy and we may see a small relief reaction early next week," said Jasani. Vaibhav Shah, Fund Manager at Torus Oro PMS expects that the Fed may try to provide a trajectory on interest through their hawkish narrative.