Most markets down as traders eye key Powell speech

Stocks sank Monday and the dollar rallied on renewed concerns about Federal Reserve plans to ramp up interest rates to combat runaway inflation.

All eyes are on a symposium in Jackson Hole, Wyoming where Fed boss Jerome Powell will deliver a speech that traders will follow for an idea about the bank’s next moves.

A dip in price rises and signs of economic slowdown had raised hopes policymakers would ease up -- and possibly cut rates next year -- after two successive, 75-basis-point hikes, helping equities rally globally.

But that optimism has slowly been eroded in recent weeks as Fed officials, including Powell, have warned that the battle against inflation was far from won, particularly as the jobs market remained resilient.

One of the latest was Richmond Fed boss Thomas Barkin, who reasserted his commitment to bringing inflation back to two percent from the four-decade high of around nine percent.

He said on Friday the policy board would “do what it takes to get there”, but warned: “There’s a path to getting inflation under control but a recession could happen in the process.”

Jonathan Millar of Barclays said it was unlikely Powell would signal a slowdown in rate hikes this week.

“It does seem like what we’ve heard from Powell so far suggests there’s quite a high bar for them to transition from aggressive hikes” to 25 basis points.