Get Ready for More Pain in September

Market Fall By 4.2%

S&P 500 is down by 4.2% after Fed Chairman’s Hawkish remarks at Jackson Hole Economic Policy Symposium

Here are the Key Highlights of Powell’s Speech:

Need Price Stability

The economy needs price Stability and Fed’s  goal is to bring inflation below 2%

In order to achieve price stability, Federal Reserve will hike interest rates and other tools to forcefully bring demand down.

jerome powell Said

More Pain Is Coming

The rise in interest rates will increase unemployment and there will be more pain for households and businesses. These are unfortunate costs of reducing inflation.

In the short run, Fed needs to increase interest rates to 4%

Powell said the September inflation decision will be based on July and August inflation data.

The personal Consumption Expenditures Index (PCE) is the Fed’s Preferred indicator of inflation. Fed wants to bring PCE below 2%  which was 6.8 in June PCE 6.3% in July.

Next 75 Basis Hike

After Powell’s Speech in Jackson Hole, the market is anticipating a probability of a 75 basis point hike in September.

The market will remain volatile in upcoming months till there is a significant drop in inflation.

US Aug Job Report-Suggests That Fe Will Hike Interest Rate Aggressively

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