Markets are preparing for the main address by Federal Reserve Chair Jerome Powell at the Symposium in Jackson Hole next week, a speech that could set the tone for monetary policy this fall.
Fresh economic data has complicated the Fed's path. The Producer Price Index (PPI) rose by 0.9% in July compared to the previous month, marking the sharpest increase in three years, while it increased by 3.3% year-on-year. Higher-than-expected data jolted investors who were betting on aggressive rate cuts later this year.
Inflationary pressure remains entrenched.
Despite a decline in the overall Consumer Price Index, persistently high core inflation and surging wholesale prices indicate that price pressure remains entrenched. This has raised questions about how far the Fed can go in easing without reigniting inflationary risks.