If we summarize the Jackson Hole comments we made throughout the week; We will follow the Fed’s potential and progress in QE reduction from Powell’s speech tomorrow. Powell will probably make a statement that the economic risk balance is slightly better. However, the balance point of how inflation and economic recovery phases bring us closer to the phenomenon of tapering will come to the fore a little more in the speech and we will see whether a weight balance will be in line with the FOMC minutes.
The FOMC minutes have cleared the “tapering” path a bit more, however, roughness in some economic data details and the number of virus cases revealing the potential for a slowdown in the economy through the Delta variant are easing some of the “tapering” concerns. In fact, the fact that JH is held in a virtual environment rather than a physical one in itself constitutes an argument that will form a basis for “tapering” opponents. Against this; We obtain readings that can be considered robust in terms of the financial balance effect of high inflation and employment. The hardship effect of employment comes from demographic distribution and pay scales. Therefore, as a detail in growth, the rate of wage increases is important in terms of the ability of households to consume autonomously due to a situation that inflation also has to bring. However, it is a phenomenon that can increase demand inflation within the scope of its effect. The main trend in the data also has a cycle effect, this effect fades as the period progresses, but the data can be consistent with the previous one with the delay effect after one or two periods.
If the Fed is to meet the “average inflation” target as soon as possible, it needs inflation that will remain below the 2% threshold for a certain period of time. Thus, the level to be reduced once the headwind in inflation has passed will not be enough for this average target, and the Fed has a chance to at least keep demand somewhat under control, leaving it to just out-of-control items. Costs will still feed inflation, let’s look at it through durable consumption and credit expansion. Low interest rates cause prices to rise in the real estate market, which is also affected by building costs. Rising real estate prices increase home and office rents. The increase in household expenses may cause a demand shock in other consumption items if their incomes do not increase. Decreased demand can slow economic growth. The increase in office rents also increases the costs of companies. The increase in the costs of the companies is reflected as an increase in the prices of products and services.
The next milestone will be the September FOMC meeting, even if Powell delays the situation by not making a tapering statement. In fact, it seems more appropriate to make such monetary policy transformations in FOMCs with economic projections.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
