Kevin Warsh To Make First Jackson Hole Speech As Fed Chair

It's not entirely clear he will deliver.

The chairman's communications strategy is off to a rocky start. After the July policy meeting, Warsh offered little insight on his views of the economy and avoided offering forward guidance on interest rates. Investors interpreted his comments as showing a lack of resolve to bringing inflation back to target, and long-term bond yields subsequently climbed to a two-decade high.

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For the first time as leader of the world's top central bank, Warsh will offer keynote remarks at the Kansas City Fed's annual Economic Policy Symposium. With Treasury yields still elevated by sticky inflation and fiscal deficit concerns, he's under pressure to act more like his predecessors and give clearer guidance of how the Fed might react over the remainder of the year.

But with five task forces created by Warsh now reviewing key aspects of the Fed's inner workings, including one on communications, the chairman may simply reiterate his commitment to price stability and avoid saying how the Fed plans to get there.

Speaking Sunday on CBS's Face the Nation, Minneapolis Fed President Neel Kashkari - one of three officials who called for a hike last month - highlighted his concerns over potentially persistent inflation, but stopped short of saying he would once again call for a rate increase in September.

"We need to see more data, but I don't want to prejudge the next meeting," he said. "But I'm not feeling confident right now that inflation is heading back down to target in a short period of time."

More recent data have shown inflation, while still above the Fed's 2% goal, may be starting to cool. On Wednesday, the government will issue the latest personal consumption expenditures price index - the Fed's preferred inflation gauge.

Economists estimate the PCE price index rose 3.6% in July from a year ago. While that would be the smallest annual increase in four months, oil prices have been rising again this month as the Iran war drags on.

The same report is forecast to show little change in inflation-adjusted personal spending. Other economic releases in the coming week include revised second-quarter gross domestic product on Wednesday and July new-home sales on Tuesday. On Friday, the Bureau of Labor Statistics will issue its preliminary benchmark payrolls revision for the year ended in March. 

Turning north, Canada is set to release second-quarter GDP figures, with analysts predicting the economy expanded at its fastest pace since early 2023. Potential upward revisions to earlier quarters could strip away the country's technical recession label.

That will provide little distraction from the escalating trade relationship with its neighbor: US-Canada talks fell apart at the last minute on Friday night, with fresh 50% tariffs on billions of dollars of Canadian goods taking effect and Prime Minister Mark Carney promising to retaliate.

Elsewhere, key German data, early inflation readings from Japan to France to Mexico, and a decisive vote on whether Iceland should resume its entry talks with the European Union will take center stage. Central bankers in South Korea and the Philippines may hike rates, while Hungary could cut.  

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