Fed Chair Waller Takes Hawkish Stance at Jackson Hole Meeting

On August 29, CICC analyzed Fed Chair Waller's speech at Jackson Hole, considering his stance to be hawkish. Waller acknowledged that inflation remains elevated, clearly stating that interest rates are still the primary policy tool and that actions will be taken "as needed." He pointed to economic resilience, stable employment, and loose financial conditions as the basis for his view, indicating that current policy risks are skewed towards inflation. Waller attributed the responsibility for 65 months of inflation exceeding targets to the central bank itself, correcting his ambiguous statement in July about "letting the market replace the Fed in raising rates." CICC believes that this speech helps to rebuild the Fed's credibility, as the market began to trade on the marginal recovery of policy credibility after the speech. In the long term, Waller continues to assert that AI may reshape the economy and policy framework, pushing for reforms such as reducing forward guidance. This statement has increased the probability of a rate hike by the Fed this year, but market liquidity is ample, lacking the discipline and predictability of policy. As long as inflation can be suppressed in a timely manner, it may actually benefit the market in the medium term.

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