Hawk message before Jackson Hole

Minneapolis Fed President Neel Kashkari said his biggest fear is that the central bank will misinterpret the extent and persistence of price pressures and will have to make larger rate hikes later to control inflation. Ahead of the Jackson Hole meetings, where markets are locked, Fed members continue to draw attention to high inflation. Minneapolis President Neel Kashkari, a member of the Fed's dovish wing, said that US inflation is running very high and that the bank needs to take action to control inflation. Stating that the US economy is at full employment by many measures and that this is accompanied by very high inflation, Kashkari said, “This is a very unbalanced situation. We need to tighten monetary policy to achieve balance.” Kashkari stated that if they cannot anchor expectations at around 8-9 percent inflation, they may need an aggressive move similar to Volcker. Former Fed President Paul Volcker made shock rate hikes in the 1980s to counter rising inflation, and inflation fell after the US entered a recession at that time. Goldman Sachs expects a dovish message According to Goldman Sachs Chief Economist Jan Hatzius, Fed Chair Jerome Powell may give a speech on Friday emphasizing the slowdown in the rate hikes. Hatzius, who reminded that interest rates were increased by 75 basis points twice in a row, stated that they expect a 50 basis point rate hike in September if no surprise data comes. Hatzius said that although the rate of interest rate hike was not given in the speech, the risks of excessive tightening could be highlighted. On the other hand, Hatzius, who emphasized that inflation is running well above the 2 percent target, also expects Powell to emphasize that “our work is not over yet.”