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BofA Sees Powell Hawkish vs Jul FOMC; GS/DB Don't See Strong Signals (1/2)

FED
Ahead of today's keynote speech by Fed Chair Powell at Jackson Hole, some sell-side analysts' takes on what to expect:
  • BofA: Powell's tone at Jackson Hole will be less balanced than the July FOMC minutes since the latest data raise the risk of a fresh increase in inflation. In terms of the extent and timing of additional hikes, Powell is likely to emphasize that every meeting is live.
  • Citi: Powell may begin discussing the potential for a higher R-star - which would hawkishly imply structurally higher policy rates. Powell will no doubt welcome the string of softer inflation readings and slower-but-solid job growth, but Citi’s economists expect he will not sound quite as dovish as NY Fed President Williams, who indicated a willingness to cut nominal rates in early 2024.
  • Deutsche: Despite the importance of the current moment for Fed policy, we do not expect Chair Powell to send strong signals about the near-term policy path. The data dependence message from the July FOMC meeting was clear, and it is too early for the Chair to abandon that approach. He is is also unlikely to provide guidance on rate cuts beyond his recent comments about normalizing rates to ensure real rates do not rise too much as inflation moderates. We would be somewhat surprised if Powell dived into the r-star topic.
  • Goldman Sachs: We are not expecting to get a strong monetary policy signal out of Jackson Hole. Key data including the PCE inflation and employment data come out shortly after the symposium and the Fed will likely wait to be informed by these new data before changing their current posture. We expect Powell’s speech will touch on similar themes to last year’s - this time around, a soft landing looks more plausible than at any point over the last year, and we expect that Powell’s message will be that they’re going to see the job through. For the conference as a whole, we will be watching particularly closely for any discussion of the neutral rate.
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