Morgan Stanley expects Federal Reserve Chair Waller to avoid offering much in the way of near-term rate guidance in his Jackson Hole remarks, shifting the focus away from immediate policy signaling and toward a broader outline of longer-run priorities. According to the bank’s chief U.S. economist Michael Gapen and global macro strategist Matthew Hornbach, Waller has repeatedly argued that the Fed should reduce both its communication footprint and its use of forward guidance, making it unlikely that he will center his speech on the September meeting, the level of rates in December, the number of hikes or cuts this year, or short-term balance sheet policy. Instead, Morgan Stanley sees the speech as a venue for Waller to lay out a more systematic view of where he wants to take the central bank over time. The bank said the discussion could cover the Fed’s balance sheet, its inflation framework, communication practices, AI and productivity, and the quality of U.S. economic data, areas that line up with several working groups Waller previously established.
BlockBeats reported on Aug. 28 that Morgan Stanley expects Federal Reserve Chair Waller to offer little near-term rate guidance in his speech at the Jackson Hole conference.
Michael Gapen, the bank’s chief U.S. economist, and Matthew Hornbach, head of global macro strategy, said Waller has repeatedly argued that the Fed should reduce its communication and forward guidance. On that basis, they expect him not to focus on the September policy decision, the level of interest rates in December, the number of rate hikes or cuts this year, or short-term balance sheet policy.
Instead, Morgan Stanley said Waller may use the speech to spell out a longer-term policy direction. The topics it highlighted include the Federal Reserve’s balance sheet, the inflation framework, communication practices, AI and productivity, and the quality of U.S. economic data.
Morgan Stanley added that those topics correspond to several working groups previously established by Waller. In the bank’s view, the speech is less likely to serve as a preview of the September rate decision and more likely to mark Waller’s first relatively systematic explanation of the direction in which he wants to take the Fed.
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