Powell suggests further rate hikes if necessary.

The market experienced volatility as traders responded to Powell's address at the Jackson Hole Symposium.

Highlights

• Federal Reserve Chair Jerome Powell delivered a speech at the Jackson Hole Symposium.
• Powell highlighted that the Federal Reserve is prepared to increase interest rates if inflation continues to stay at elevated levels.
• The Fed maintains its commitment to pushing inflation towards its target rate of 2%.

On August 25, Fed Chair Jerome Powell delivered his speech at the Jackson Hole Symposium.

In his speech, Powell stated that the Federal Reserve is prepared to raise interest rates further if necessary, aiming to bring inflation back in line with the Fed's 2% target.

Powell cautioned against premature celebration despite positive economic data, highlighting that the labor market remains tight. He suggested that achieving the 2% target may require a period of below-trend growth and a less tight labor market.

Powell also acknowledged the increasing complexity of managing inflation, as it has become more sensitive to labor market dynamics. He emphasized the Fed's careful approach in evaluating whether to tighten policy further or maintain the current level of the federal funds rate.

Following Powell's speech, the U.S. Dollar Index retreated below the 104.00 level, with traders responding to a slight decrease in Treasury yields. While Powell mentioned the possibility of further rate hikes, he did not provide any new information. Traders should expect volatile trading as markets digest Powell's speech and pay attention to remarks from other policymakers.

Gold remained range-bound between $1915 and $1920, with a weaker dollar and lower Treasury yields being supportive factors. However, the sustainability of the dollar's pullback remains uncertain.

The S&P 500 attempted to rise above the 4400 level in response to Powell's words. Although Powell did not express a dovish stance, some traders appeared concerned that he might indicate another rate hike.

Overall, traders should anticipate continued volatility across various asset classes throughout the day.