The highly awaited speech did little to calm investor fears that the economy may soon enter a recession.
Stocks posted their worst day in months on Friday after Federal Reserve Chair Jerome Powell in his highly awaited Jackson Hole speech doubled down on the central bank’s commitment to ease decades-high inflation with ongoing interest rate hikes, keeping in line with investor expectations but doing little to quell fears additional hikes could tip the economy into a recession.
“A theme has become clear in the Fed’s public communication: Going forward policy needs to be tighter and then be kept in restrictive territory for “some time,” possibly for years,” says Troy Ludtka, a senior economist at Natixis CIB Americas. “It is difficult to see how this is credible without throwing the US into some version of a financial crisis.
