Fed's Jerome Powell and BOE's Mark Carney. Amber Baesler/AP
The Fed vs Inflation
Analysis: Powell deflected the question - when will interest rates be cut?
Although Jerome Powell yesterday flagged that the central bank was ready to raise interest rates again, the Fed is probably ready. That's what the Wall Street Journal writes in an analysis.
The newspaper notes that Powell's statement could be interpreted as not wanting to remove the option to tighten more if needed. In addition, it took the focus away from the otherwise obvious follow-up question: When will the reductions begin?
As soon as investors ask that question, the economy heats up again – a scenario the Fed wants to avoid.
Even Barron's Megan Casella agrees and writes that Powell's vague statements "were no accident". It is also uncertain how the central bank will act going forward in these turbulent times.
However, the message that interest rates need to be kept high for a longer period of time can be considered both explosive and controversial, writes DN's Carl Johan von Seth.
"But there is no risk-free path for central banks. 'High interest rates for a long time' is also a policy that can backfire," he writes in an analysis.
Jacquelyn Martin/AP
The Fed vs Inflation
Economist: No increase in September - close to the top
In yesterday's speech in Jackson Hole, Fed Chair Jerome Powell paved the way for more hikes if needed. But the central bank is likely to rest on its laurels at the September meeting and leave options open after that. Laura Rosner-Warburton, senior economist at Macropolicy Perspectives, tells the New York Times.
- We are close to the top, or already there, and the Fed will move forward cautiously, she tells the newspaper.
The market seems to agree with Rosner-Warburton to some extent. After Powell finished his speech, 20 percent of investors priced in a September hike. However, almost half predict that there will be another increase before the end of the year, writes Reuters.
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