Market Strategist Urges Jerome Powell To ‘Separate Fed From The Stock Market’ Ahead Of Jackson Hole Speech

MetLife Investment Management’s chief market strategist, Drew Matus, has urged Federal Reserve Chair Jerome Powell to disentangle the Fed’s actions from the stock market.

What Happened:

Matus pointed out that the Fed’s current strategy is flawed as it appears to be excessively swayed by the stock market’s performance. He contended that the Fed’s decisions should not be influenced by the unemployment rate exceeding 4%, or by the easing of financial conditions.
“What he needs is separate the Fed from the stock market and really just kind of say, ‘hey look…we think we are winning the war on inflation, the unemployment rate is going to continue to move higher in coming months and that will put the downward pressure on inflation. So we’ve got this,” Matus said on Friday during CNBC’s “Market Alert.”

Matus stressed that Powell needs to explain why a few rate cuts will aid in the battle against inflation and persuade people to discard the notion of hundreds of basis points cuts in the next six months. He proposed that the Fed should concentrate on winning the inflation war and managing the rising unemployment rate, which will naturally suppress inflation.

Matus’s remarks come before Powell’s scheduled appearance at the Jackson Hole symposium, where he is anticipated to address the Fed’s fight against inflation.

Why It Matters:

The market has been speculating about Powell’s upcoming speech at the Jackson Hole symposium. Traders are expecting Powell to confirm a rate cut. However, renowned market analyst Peter Boockvar believes that Powell will only acknowledge a September rate cut based on employment data, not the inflation rate.

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Originally Posted August 23, 2024 – Market Strategist Urges Jerome Powell To ‘Separate Fed From The Stock Market' Ahead Of Jackson Hole Speech