Rolling live coverage of business, economics and financial markets as investors anticipate new approach to inflationStock markets move lower ahead of Jackson Hole speechRolls-Royce loses record £5.4bn in first half, seeks £2bn salesTikTok chief executive steps down after Trump ban threat 11.35am BST Mark Haefele, chief investment officer, UBS Global Wealth Management, said:While we expect the Fed to shy away from more radical easing measures, such as explicit controls on government bond yields, we believe Powell will likely outline other dovish measures. These could include a move toward average inflation targeting, giving the central bank more leeway to allow inflation to overshoot the 2% target while keeping rates pegged close to zero.Maybe the age of the independent, activist central bank head is also coming to an end. Fiscal policy is more powerful and monetary policy needs to work in harmony with it. Monetary policy is being asked to do things (like tackle economic inequality) that it really isn’t suited to. But, here we are, waiting for Jay Powell to turn up at Grafton’s Saloon. He’s already done everything he can, he’s almost out of bullets and he may even have already won the fight, but we have placed our faith in him and desperately want fresh encouragement. 11.01am BST The Fed has really been the dominant force in markets since the pandemic started. It laid on trillions of dollars of support for assets in the form of quantitative easing stimulus and opened the dollar taps as demand for the reserve currency rocketed during the panic.However, there are concerns that it is running out of firepower to stimulate the US economy (which is why central bankers have been so keen for fiscal stimulus since the financial crisis). It has been widely speculated that the Fed will soon strengthen their forward rate guidance in response to the review to signal that rates will remain on hold for much longer into the economic recovery than during past economic cycles. The Fed is expected to signal a greater tolerance for allowing inflation to overshoot their target for a period perhaps through adopting a form of average inflation target.Another potential focus could be any updated views on the effectiveness of other policy tools such as yield curve control whereby the Fed contemplates capping yields, although recent comments suggest it is unlikely to be implemented at the current juncture. Continue reading…
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FTSE 100 falls ahead of crucial Jerome Powell speech – business live
