Written by: Rita
The Federal Reserve’s annual Jackson Hole Economic Symposium will be held from August 27 to 29. The most anticipated event on the agenda is the keynote speech by Federal Reserve Chair Powell at 10:00 AM Eastern Time on Friday.
On August 26, Goldman Sachs released a forward-looking report noting that Walsh is unlikely to provide clear policy guidance for the September FOMC meeting in his speech, but is expected to address three key themes: reaffirming the commitment to the 2% inflation target, explaining the rationale behind his Fed communication strategy, and discussing macroeconomic issues such as productivity growth and global economic shocks. Goldman Sachs believes that Walsh’s dovish leanings, combined with recent improvements in inflation data, make it highly likely that the Fed will hold rates steady through September and the end of the year.
Wash's speech focused on three key themes.
Goldman Sachs expects Wash to cover three core areas in his speech.
First, reiterate the inflation target. Walsh will likely reiterate the Federal Open Market Committee’s commitment to bringing inflation down to 2%, and may explicitly define this target using PCE (Personal Consumption Expenditures) inflation as the measure.
Second, explain the communication strategy. Wash previously stated that if the Federal Reserve spoke less, financial markets would react more strongly to economic data, providing policymakers with more useful insights. Goldman Sachs expects him to further elaborate on this idea at Jackson Hole.
Third, explore macroeconomic topics. Wash mentioned at the July press conference that he might discuss, “What exactly has happened to productivity? What exactly has happened to demographics? What exactly has happened to the global economy under shocks?” Goldman Sachs expects him to reiterate that AI will boost productivity growth and become a “significant deflationary force.”
Goldman Sachs noted that Wash’s view on AI as a deflationary force is worth attention. If AI continues to boost productivity, it could suppress cost pressures over the medium to long term, suggesting that the Fed’s window for maintaining interest rates unchanged may be longer than markets expect.
Improved inflation data supports holding rates steady.
Goldman Sachs believes that two consecutive months of improved inflation data in June and July would strengthen most Federal Open Market Committee members' confidence in maintaining interest rates unchanged. Although a minority of members who supported rate hikes at the July meeting may still hold their original stance, the majority of voting members are likely to favor holding rates steady after seeing improved inflation data.
Between Jackson Hole and the September 16 FOMC meeting, there is still one round of CPI and PPI data to come. Goldman Sachs expects the month-over-month growth rate of core CPI and PCE inflation in August to be around 0.2%. The methodology adjustment scheduled for September 30 (an annual routine statistical revision) will reduce the year-over-year core PCE inflation rate by at least 0.2 percentage points, with further declines expected after additional revisions in December. Combined with three consecutive months of improving inflation data and the upcoming downward revision, this suggests that the largest impacts from tariffs, oil prices, and AI-driven demand on monthly inflation have already passed.
Goldman Sachs expects the Federal Open Market Committee to hold rates steady at its September meeting and through the end of the year.
The short-term impact of financial innovation is limited.
This year’s conference theme is “Financial Innovation: Implications for Payments and Policy.” Goldman Sachs expects conference papers to focus on issues such as stablecoins, but with limited impact on recent monetary policy decisions.
Following past practice, some Federal Open Market Committee participants may accept television interviews during the meeting. Goldman Sachs believes that the minority of members who supported a July rate hike may still hold their position, but most members will likely feel more confident in maintaining rates unchanged following improved inflation data.
Disclaimer
This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (Goldman Sachs, August 26, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage’s analysts and represent the position of their respective institution, not the views of Chaoxiang Research, nor do they constitute any investment advice.
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