Markets boost after Jerome Powell’s warmongering speech in Jackson Hole

Crypto prices rose in the hour leading up to the speech, with bitcoin trading just over $21,800 and ether rising above $1,700. Prices fell during the speech as the Fed Chairman shared with his colleagues projections for median interest rates – just under 4% through the end of the year.

“While the weaker inflation readings for July are welcome, the single-month improvement is well below what the Committee will need to see before we are confident inflation is coming down,” Powell said. . He then added that the Fed’s decision in September will depend on “the totality of incoming data and the evolution of the outlook.”

The annual inflation rate in the United States slowed to 8.5% in July, from a 40-year high of 9.1% in June. This was below the market forecast of 8.7%. The US economy fell 0.6% in the second quarter, data showed yesterday. This was better than estimates of -0.7%.

An aggressive stance against inflation has and will likely continue to be a short-term headwind for all risky assets, including digital assets, said Jack Neureuter, research analyst at Fidelity Digital Assets.

Powell warned that households and businesses would feel the pain as the bank moved to contain inflation.

“If there is growing evidence that inflation has peaked, then it is likely that longer-term interest rates would fall significantly from their current levels – serving as a possible catalyst for the both for risky assets and relatively looser financial conditions,” Neureuter said.

Kansas City Fed chief Esther George shared more telling remarks on Thursday, saying Bloomberg TV rates could top 4% at some point. “We need to raise interest rates to slow demand and bring inflation back to our target,” George said.

The Jackson Hole Symposium is held annually in Wyoming and typically brings together central bankers, finance ministers, academics, and other market participants from around the world. The conference theme for 2022 is “Reassessing Constraints on Economics and Politics”.

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