Market Update

Global equity markets retraced some of their impressive gains from the previous week, following remarks by several Fed policymakers who argued that the US needs higher interest rates to combat inflation, even if it means potentially triggering a recession.
Furthermore, on Wednesday, August 17, 2022, the minutes of the most recent Fed monetary policy meeting held on July 27, 2022, were released. While policymakers acknowledged that economic growth momentum was waning and reiterated the risk of tightening monetary policy too aggressively, they also indicated that they aren't overly concerned about slower economic growth or over-tightening. Instead, they believe that higher interest rates are necessary to align demand with supply and prevent the current high inflation from becoming entrenched.
Although we anticipate that it will become increasingly challenging for prices to keep rising, especially as we approach the end of what's known as 'base effects,' and considering the recent decline in oil and other commodity prices, it appears that Fed policymakers are still inclined towards implementing another substantial interest rate hike at their meeting on September 21, 2022. Of course, there are several important economic data releases to consider before that date.
Interestingly, the annual Jackson Hole Economic Policy Symposium is scheduled for next week, taking place from August 25 to August 27, 2022. We will be closely listening to Fed Chair Jay Powell's speech during this event, as it may contain significant insights.
In other news, data released on August 19, 2022, indicated that UK retail sales rose by 0.4% in July. This exceeded economists' expectations of a 0.3% contraction. Coupled with the robust UK employment data released earlier in the week, this positive retail sales figure may bolster the case for a significant interest rate increase by the Bank of England when they convene on September 15, 2022.