Powell’s Jackson Hole speech; not hawkish

Jerome Powell gave his widely anticipated speech at Jackson Hole this morning. Despite much of the financial punditry thinking he needed to contort himself in unnatural ways to demonstrate his hawkishness; he gave a straight-forward speech about the business cycle advancing and being data-dependent. He said several hawkish things, but even more dovish things. As I wrote yesterday, it was done carefully to give credence to both sides. I’ve attached the transcript of his speech with passages highlighted red for hawkish or green for dovish. There are about 1.5x dovish words to hawkish words.

Important dovish quotes:

“Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks.”

“Beyond changes in interest rates, bank lending standards have tightened, and loan growth has slowed sharply.”

“growth in industrial production has slowed, and the amount spent on residential investment has declined in each of the past five quarters.”

“Payroll job growth has slowed significantly. Total hours worked has been flat over the past six months, and the average workweek has declined to the lower end of its pre-pandemic range”

“Wage growth across a range of measures continues to slow”

“We see the current stance of policy as restrictive, putting downward pressure on economic activity, hiring, and inflation.”

“The wide range of estimates of these lags suggests that there may be significant further drag in the pipeline.”

Overall, the Fed seems to be carefully transitioning from a raising bias to a neutral bias.