Mayor Andohan Now Eyes 'Jackson Hole'... Powell Speaks on the 23rd

Following the inflation indicators, signals of a soft landing for the U.S. economy have also been confirmed in consumer indicators, and now the market's attention is focused on the words of Jerome Powell, Chair of the Federal Reserve (Fed). At the Jackson Hole Symposium, known as the 'Revelation of the Teton Mountains,' scheduled for the 23rd (local time), the market could once again be shaken depending on what remarks Chair Powell makes. Currently, Wall Street expects Powell to lay the groundwork for the start of a rate cut in September.

[Image source=Reuters Yonhap News]

According to the Fed, the highlight of the Jackson Hole Symposium, hosted by the Federal Reserve Bank of Kansas City and held in Jackson Hole, Wyoming from the 22nd to the 24th, is undoubtedly Chair Powell's keynote speech. Powell's speech on the theme of 'Economic Outlook' will take place at 10 a.m. Eastern Time on the 23rd, which is 11 p.m. Korean time.

The Jackson Hole Symposium, held annually around this time, is a gathering where central bank governors, finance ministers, and economists from around the world, including the Fed, discuss the global economy and current issues. Remarks made here by influential figures who move the global economy have shaken markets to the extent that terms like 'Revelation of the Teton Mountains' and 'Jackson Hole Consensus' have emerged. The venue was also where then-Fed Chair Ben Bernanke announced quantitative easing during the financial crisis. In 2022, Powell's hawkish remarks on inflation caused major stock markets to plunge, confirming the so-called 'Powell Shock.'

In particular, this year's speech by Chair Powell is likely to be the last official speech before the September Federal Open Market Committee (FOMC) meeting. It is an occasion where hints about the size of the September rate cut and the pace of future cuts can be gauged. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) rate futures market currently reflects more than a 75% chance that the Fed will cut rates by 0.25 percentage points in September. The big cut (0.5 percentage point cut) forecast, which had surged to the 80% range following the employment shock earlier this month amid recession concerns, has dropped to 25% as of this day.

This follows the recent release of consumer price index (CPI), producer price index (PPI), and inflation expectations data, which showed a slower pace than expected, and the retail sales data released on this day also pointed to a soft landing signal for the U.S. economy. Retail sales in July, which represent two-thirds of the U.S. economy's consumer power, increased by 1% month-over-month, showing unexpectedly strong performance. The results of retail giant Walmart also exceeded expectations.

In this context, Powell's upcoming speech at Jackson Hole next week is widely expected to effectively put an end to the recession fears that spread earlier this month. However, since Fed officials have been emphasizing cautious decisions day after day, the size of the September rate cut is expected to become clearer after the August employment report, which will be released on the 6th of the same month. Recently, Powell has stated that among the Fed's dual mandate of full employment and price stability, he will place more weight on employment.

Meanwhile, with recession fears easing due to better-than-expected consumer indicators, the three major indices on the New York Stock Exchange all closed up by 1-2% on this day. Walmart's stock price jumped more than 6% following its strong earnings report.

This content was produced with the assistance of AI translation services.