Powell just had his Jackson Hole speech which alludes that we will be in higher interest rates environment for quite a lot longer, and while any rate hikes may be slower and more prudent the inflation goal is 2% and rates will need to move up to reach this if needed. It also states that a recession or flatline growth will be needed (which is not currently occurring and may need monetary policy adjustments).
https://www.marketwatch.com/story/po...=mw_latestnews
This approach is likely impact our BoC outlook as well, as we are below US rates and too much of a spread will cause the Canadian dollar to tumble further.
Quote:
In his remarks, Powell repeated his firm intention to get inflation back to the 2% target. He rejected calls to raise the Fed’s 2% target and took no victory lap for the recent benign inflation readings, saying it was just the beginning of what was needed.
Powell said inflation remained “too high,” he said. The Fed “will keep at it until the job is done.”
“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” Powell said at the beginning of his remarks.
Powell said that, getting inflation back to 2%, “is expected to require a period of below-trend economic growth as well as some softening in labor market conditions.”
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