Citi: Jackson Hole May Not Live Up To Expectations

Citi note that “the broad consensus seems to be that the Fed Chair Powell may use Jackson Hole to emphasise higher-for-longer policy rates and, perhaps, a (temporary) shift higher in R* given economic resilience.”

• “However, it is difficult for Powell to be explicit on R* without a new framework, and the guy with the established framework, NY Fed President Williams, has already suggested that the neutral rate is likely ‘just as low as it was’ before the pandemic.”
• “The risk is that Powell, while not dovish, is just not hawkish enough to meet market expectations.”
• We have outlined a similar train of thought in our own Jackson Hole preview (click for full document).