Fed Back on the Hawkish PR Offensive

The pre-prepared text from Yellen’s speech at Jackson Hole today didn’t necessarily offer much in the way of surprises but it did confirm one thing, there is now a clear and public hawkish consensus building within the Fed and Chair Yellen is on board.

The last time we saw this was at the start of the summer when it appeared that the Fed was intending to raise rates, only for the UK to throw a spanner in the works with Brexit. We also saw a similarly hawkish PR offensive towards the end of last year just before the Fed raised rates for the first time in almost a decade. I don’t think this is a coincidence and unless something interferes again – which it easily could and has repeatedly over the last year – I think we’ll see another hike this year, possibly even as early as September. The only issue with September is that prior to the release of the text, markets had all-but priced this out and it would take something substantial to get them on board prior to the meeting. December may make more sense followed by another in the first half of next year.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.