What happens next now that Jackson Hole is over? More Fed hawkishness is in the cards

What’s ahead for Wall Street and Main Street when Federal Reserve officials return to work after a few days in the fresh mountain air of Jackson Hole, Wyoming ?

Economists expect the central bankers will seek to underscore and expand on Fed Chairman Jerome Powell’s message that the “pain” of derailing inflation now is much worse than the “agony” of high inflation in the future if the central bank does not act forcefully. With this task done, “the Fed now has to underscore interest rates need to get to a higher level,” said Vince Reinhart, chief economist at BNY Mellon Investment Management.

Powell’s remarks about “pain” for households and businesses and “sub-par growth” opens the door for the Fed’s Summary of Economic Projection to be different now, said Diane Swonk, chief economist at KPMG, in an interview on the sidelines of the Fed’s Jackson Hole retreat. The Fed projected the “terminal rate” of its benchmark interest rate would only rise to 3.8% next year. The terminal rate is the highest rate of a cycle.

William English, a professor of finance at Yale University and a former top Fed staffer, says the Fed faces two risks.On the other, the risk is that the Fed isn’t doing enough to cool inflation and it stays hot and the public starts to expect higher prices.

It will be massively unprecedented rate hike

Too much cash is still available, the market will go up in 2 days

With the warning from Fed, the coming bad news will never be good news for market.

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