Powell’s Jackson Hole Speech Outlines What Could Move Rates Higher

Federal Reserve Chair Jerome Powell’s speech on August 25 suggested interest rates are likely to remain high for some time. Perhaps a greater concern for markets is that Powell’s assessment that either economic growth needs to slow, notably with regard to subdued home prices and softening wage growth, or interest rates might need to rise further to stamp out residual inflation. If home prices rebound or wage growth doesn’t slow, we could see further interest rate hikes, perhaps in the next two months.

That said, Powell saw some positive inflation trends, these just haven’t been sustained enough to call inflation beaten. Still, consistent with other speeches from the Fed Chair, it was not a particularly optimistic outlook.