According to Federal Reserve Chair Jerome Powell at the 2023 Jackson Hole symposium, the central bank may need to raise interest rates again.

There were no significant surprises from last weekend's Jackson Hole symposium. The heads of major central banks remain focused on inflation risks, thus continuously emphasizing the importance of high interest rates.

The Greenback prevails in such situations. The US Dollar Index (DXY) briefly touched its highest level since early June at 104.44 on Friday, though it later eased to the 104.00 range in early New York session trading this week (August 28th).

dollar climb after jackson hole

Federal Reserve Chair Jerome Powell told participants at the symposium that the central bank may need to raise interest rates again to achieve sustainable inflation targets. His statement aligns generally with his messages following the latest FOMC meeting.

Powell's persistence only slightly altered market expectations regarding the prospect of the next Fed interest rate hike. FedWatch CME data indicates an 80% probability for the scenario where The Fed keeps interest rates unchanged in the next month's meeting. Meanwhile, the probability increased from 33% to 51% for a 25 bps interest rate increase in November.

Chris Weston, Head of Research at Pepperstone, indicated there wouldn't be an interest rate hike from The Fed in September. He mentioned that November would be an event where data might potentially alter rate expectations. With several other G10 central banks already considering a pause in interest rate increases, the probability of The Fed doing the same in November has contributed to the dollar's support.

The next market participants will likely focus on US economic data, including core inflation (PCE) and Nonfarm Payroll (NFP) figures to be released in the coming days. If the data points towards the risk of rising inflation, the probability of an interest rate hike may change once again.

Several other major central bank leaders did not provide new indications about their policies at the Jackson Hole Symposium. ECB President Christine Lagarde once again emphasized the importance of maintaining high-interest rates to curb Eurozone inflation. Meanwhile, BoJ Governor Kazuo Ueda reiterated his commitment to keeping low-interest rates, as he considers Japanese inflation to still be "slightly below" the target.