In his speech at Jackson Hole, Wyo., on Aug. 25, Fed Chair Jerome Powell declared that today’s inflation “remains too high” and that the central bank is “prepared to raise rates further if appropriate.” Though virtually every press report characterized the chair’s comments as “hawkish,” analysts, pundits—and the markets—found it reassuring that Powell stuck to his “wait and see,” “we’ll be data dependent” script and didn’t suggest an even tougher tilt.
That stance left open the possibility that the Fed won’t lift its benchmark beyond the current 5.25% to 5.50% target range at the September and November meetings. Indeed, according to trading of Fed funds futures on the Chicago Mercantile Exchange, the probability of a hike for September remained practically unchanged from pre-speech levels at 19%, and the odds of a November rise dipped a bit to around 45%.
