ANZ predicted that investors will keenly await the remarks of U.S. Federal Reserve Chair Jerome Powell at the Jackson Hole seminar, seeking any hints about upcoming monetary policy directions.
The group pointed out that markets are also focusing on the possibility of changes in the review of the Federal Reserve's monetary policy framework, especially with the anticipated shift away from the 'flexible average inflation targeting' policy and a return to a medium-term inflation target of 2%.
Although this year's seminar focuses on labor market conditions, ANZ expects Powell to hint – albeit limitedly – at the upcoming September meeting, with an emphasis on risks associated with jobs and employment conditions. However, the group believes his statements will not be decisive enough to confirm a rate cut.
Regarding the September meeting, ANZ expects that tariff-driven inflation will be of a temporary nature, giving the Federal Reserve room to cut rates by 25 basis points.
Following this step, the group expects the Federal Reserve to begin a gradual easing cycle in its monetary policy in the coming period.
