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

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam