The financial markets are generally holding their breath as speeches of Fed Chair Janet Yellen and ECB President Mario Draghi at the Jackson Hole Symposiums are awaited. The occasion is seen in recent years as a platform to launch monetary policy shifts. But this time, neither Yellen nor Draghi is expected to deliver anything drastic regarding monetary policy in near term. At the same time, this could also be Yellen's last address at Jackson Hole since it's uncertain whether she will be granted another term by US President Donald Trump, after the current one expires in February. Yellen might make use of the speech on financial stability to lay down from ground work for the future and leave some legacy.
Fed George and Kaplan differ on rate
Esther George, President of Kansas City Fed which holds the symposium, sounded unbothered with the slowdown in inflation and maintained her push for another rate hike later this year. George told reporters that "while we haven't hit 2 percent, I'm reminded that 2 percent is a target over the long term, and in the context of a growing economy, of jobs being added, I don't think it's an issue that we should be particularly concerned about unless we see something change." And based on what she's seeing, "there's still opportunity" for another rate hike this year.
On the other hand, Dallas Fed President Rob Kaplan sounded more cautious. He noted that "I'm not saying we won't act by the end of the year, but we have the ability to be patient." And, according to Kaplan, the peak of interest rate at this tightening cycle is probably lower than the others. He said that "if you ask me today, I would say it's closer to 2 than to 3". Meanwhile, 10 years ago, he could have said in range of 4-5%.
Japan CPI improved but still way below target
Japan national CPI core ticked up to 0.5% yoy in July, up fro 0.4% yoy and met expectation. Tokyo CPI core rose to 0.4% mom in August, up from 0.2% yoy and beat expectation of 0.3% yoy. Corporate service price slowed to 0.6% yoy in July, down from 0.7% yoy and missed expectation of 0.8% yoy. The inflation reading is still nowhere near to BoJ's 2% target even though growth outlook improved. And the central bank just slashed its annual inflation forecast last month. BoJ expects that inflation won't hit target before 2020.
On the data front, German Q2 GDP final and Ifo business climate are the main features in European session. US will release durable goods orders.