Thursday’s remarks did little to resolve the market’s core uncertainty heading into Friday, namely whether the Fed leans toward a September hike or continues to hold.
Hammack’s (and more here ) explicit call to act sits at odds with Schmid’s reluctance to commit and Goolsbee’s more balanced, watchful tone, while Collins added a note of relative reassurance by attributing part of the hot headline print to technical factors rather than genuine demand pressure
Futures markets continued to lean against a September move while pricing strong odds of a hike by year end, a split that mirrors the divide among the officials themselves. With Warsh known for withholding forward guidance, this scattershot of pre-speech commentary may end up carrying more signal for traders than the keynote itself. — With Chair Warsh due to speak Friday, Preview: Warsh’s silence on rates leaves Fed and markets guessing before Jackson Hole Jackson Hole hype outruns Warsh playbook of saying as little as possible four of his colleagues used Thursday to stake out very different positions on how urgently the Fed needs to act on inflation. Summary: Cleveland Fed’s Beth Hammack was the most hawkish, repeating her call for a rate rise and arguing financial conditions show no sign of being restrictive after more than five years of above-target inflation.
Kansas City Fed’s Jeffrey Schmid called inflation “stubborn and sticky” but questioned whether the current policy rate is restrictive at all, and said he needs more clarity on demand-side drivers before backing a hike. Chicago Fed’s Austan Goolsbee said his biggest short-term fear is that inflation is not under control, citing energy costs from the Iran conflict and shifting tariffs as added pressure, though he noted the recent three-month trend “doesn’t look terrible.” Boston Fed’s Susan Collins called the latest headline inflation print “mixed”, saying much of the surprise came from technical factors like portfolio management fees rather than