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Investors Await Powell’s Next Moves on Interest Rates

By:
S.J. Steinhardt
Published Date:
Aug 24, 2022

Investors will be gathering in Jackson Hole, Wyo., on Friday to hear Federal Reserve Board Chairman Jerome H. Powell. They expect that the Fed will continue to raise interest rates as it seeks to tame inflation.

Powell will speak at the Kansas City Federal Reserve’s annual  Policy Symposium, and other Fed officials have already warned that the central bank is not through hiking rates to dampen demand, despite recent upticks in the S&P 500, the New York Times reported.

The rally in stocks reflected investors’ optimism that the Fed would not move too aggressively in its zeal to curb rising prices. Despite that optimism, the S&P index is still down by about 13 percent since January.

Analysts disagree on what the chairman might say on Friday. Bank of America forecasts a move to a more restrictive monetary policy that could adversely affect stocks, while another analyst hopes for a more moderate tone.

“Chairman Powell has comforted markets in the past,” Jonathan Coleman, an equity portfolio manager at Janus Henderson, told the Times. “I hesitate to predict what will happen in the next couple of days, but the market might have a relief rally.”

More clarity may become apparent in September, when stock trading gears up from summertime volumes, labor market and inflation data are released, and the Federal Open Market Committee meets to set new interest rates.

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