Commentary
The hawkish tone of the Federal Reserve Chairman Jerome Powell on Friday, Aug. 26, was unequivocal. His most important sentence, in my view, was the following: “With inflation running far above 2 percent and the labor market extremely tight, estimates of longer-run neutral are not a place to stop or pause.”
What does this mean? The Fed will do what it takes to cut inflation if the labor market remains strong. These strong messages sent ripple effects to markets. Stocks and risky assets fell in unison, and the relative strength of the U.S. dollar created another widespread depreciation of weaker currencies….