Central Bankers Attempt to Climb Out of a Hole
30th August 2023
By Falco Group
Few surprises emerged from the foothills of the Teton Range in Jackson Hole last week. For some time now, it has been evident that policy makers are still concerned about the persisting inflation and the signs of a re-acceleration in growth in the United States. Thus, while central bankers in the US remain biased – perhaps reluctantly – towards further rate hikes, the markets believe differently, ascribing just a 40% probability of a Fed rate hike by year-end. ECB President Lagarde, speaking at the annual symposium, was rather candid in her admission of the goings-on, articulating that "there is no pre-existing playbook for the situation we are facing today – and so our task is to draw up a new one". Roughly translated, central bankers are living from meeting to meeting. The Fed has admitted as much with its focus on data watching.