29 Aug POWELL’S POLICY PRAGMATISM

Federal Reserve (Fed) Chair Jerome Powell’s speech Friday at the
Economic Policy Symposium in Jackson Hole, Wyoming, served as a fitting
complement to the minutes from the Fed’s most recent policy meeting.
Both Powell’s comments and the minutes reinforced the Fed’s strong case for
hiking rates for the third time this year when it meets in September, an outcome
the markets are largely expecting [Figure 1].

The path of rate hikes beyond September is less certain, given strong growth but
still-contained inflation and largely balanced upside and downside risks.

Powell’s pragmatic emphasis in his Jackson Hole speech leaned slightly dovish.
We should see 1– 2 more hikes in 2018, but Powell’s continued commitment to
flexibility in assessing the economy increases our confidence that the Fed may be
able to avoid the kind of policy mistake that contributed to some past recessions.

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