"If these risks materialize, they could quickly manifest in the form of a sharp increase in layoffs and rising unemployment rates,"
"For monetary policy, the important question is whether these price increases could significantly raise the risk of persistent inflation problems," he stated. "A reasonable baseline assumption is that the impact will be relatively short-lived — just a one-time shift in price levels. Of course, 'one-time' does not mean 'all done at once.'" — Powell
Other key dovish statements include:
"Given that policy is in a restrictive zone, changes in the baseline outlook and risk balance may warrant an adjustment to our policy stance."
In the face of this increasing dovish shift, Powell is trying to maintain a certain degree of independence/credibility for the Fed through the results of the monetary policy framework assessment, which has eliminated the average inflation targeting regime and adopted a more orthodox 2% inflation target, with the committee emphasizing the need to 'anchor' inflation expectations at a higher neutral Fed interest rate level. This was supposed to be a more hawkish trade-off, but it has clearly been drowned out by the overwhelming dovish voices dominating macro asset classes everywhere.
Risk assets rose broadly, and stock indices ended a five-day losing streak. The U.S. Treasury bull market steepened, the dollar plummeted, and the S&P 500 Index recorded its best single-day performance since May, just a step away from its historical high.
This week's economic agenda will also be busier, with durable goods orders, PCE price index, new home sales, trade inventories, and consumer confidence index all on the schedule.
According to market estimates, the market pricing implies that the possibility of BTC reaching its historical high again within this month is only about 15%, equivalent to a payout ratio of 7 times, which is somewhat surprising following the dovish Jackson Hole meeting.
As always, this is not investment advice, please do your own research (DYOR), and we wish our readers good luck in the last week of summer vacation!
