Hawkish Jackson Hole Speech Boosts Odds of September Fed Rate Hike

StoneX market analyst Fawad Razaqzada said Wosh's speech on Friday evening was viewed as fairly hawkish. In remarks on forward guidance, Wosh said what markets expected him to say — he does not believe in forward guidance and therefore refused to pre-commit to a September rate hike. That did not stop speculation that a hike could return to the table. On inflation, Wosh said fighting it remains a clear priority, a point he elaborated at length, while adding that he is confident core inflation is moving toward the Fed's target. Overall, his speech was more hawkish than markets expected. During Wosh's Jackson Hole remarks, the market substantially repriced expectations for the Fed's September decision, with the probability of a 25-basis-point rate hike jumping from 30% to about 50%. Before the September meeting, one nonfarm payrolls report and one CPI inflation report are still due, along with some secondary data releases. Under the new chair, the Fed has become more data-dependent. Given that recent US employment reports have missed expectations by wide margins, any further weakening signal could seriously undermine market expectations for a September rate hike.