Fed not succumbing to White House pressure as USD recovers losses from Jackson Hole speech
|A data-light week was dominated by Fed chair Powell's speech at the annual Jackson Hole conference of central bankers on Friday. The emphasis here was more on potential weakness in the labour market rather than on the recent rebound in inflation further away from the central bank's targets, which the Fed expects to be temporary.
While the shift in tone could be justified by recent data, it still leaves open the question of whether the institution is starting to buckle under the relentless political pressure coming from the Trump White House.
Markets seem to share our doubts in this regard, as the initial euphoria after the publication of the speech seems to have mostly faded away over the weekend.
This week's PCE inflation report will be key, as any upward surprise would bring serious questions on the reasons for the Fed's dovish shift.
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