MUFG Research discusses its expectations for Fed Powell's speech at Jackson Hole symposium.
"The deterioration in risk sentiment has been made worse by the rhetoric from Fed officials and the FOMC minutes indicating a growing chorus in favour of moving faster with tapering. However, given COVID developments these voices may well become less evident in the coming weeks," MUFG notes.
"The marker may be set this week by Fed Chair Powell when he speaks at Jackson Hole. To reinforce recent speculation on a faster taper would only reinforce the divergence with other central banks, thus fuelling further USD gains and fuel risk of an asset price correction, a fall in inflation expectations, thus undermining the Fed’s new policy strategy. We see a more cautious speech this week that throws water on faster taper speculation," MUFG adds.