Fed focus now turns to labour market with Jackson Hole up next – SocGen
Société Générale points out that the central theme for Jackson Hole this year will focus on the labour market. That as Fed policymakers are currently caught in a heated debate internally on whether labour market tightness reflects weaker participation or a broader economic slowdown.
The firm argues that the September decision will rely more on the outlook for the labour market rather than prices. However, the latter would be a reinforcement factor as rising prices could worsen growth prospects. In turn, that will bolster the odds of the Fed pushing for rate cuts.
Jackson Hole will be the first point of contact in which the Fed’s communication will be scrutinised. But Société Générale says that upcoming events, namely the NFP on 5 September and CPI on 10 September, will likely matter more for markets than the symposium itself.
If the jobs data disappoints once again, the firm says that markets could look to test waters of pressing for a 50 bps rate cut next month.
