US Econ Notes Aug 21

Economics Date 21 August 2026 US Economic Notes

What you need to know for the week ahead Brett Ryan Commentary for Monday: This week is headlined by Chair Warsh’s keynote at the Senior US Economist Kansas City Fed’s Jackson Hole Symposium on Friday morning at 10am ET. This year’s conference theme is “Financial Innovation: Implications for Payments and Policy", but it is unlikely the Chair focuses his comments on this topic. Instead, Matthew Luzzetti, Ph.D. Chief US Economist Warsh noted at the July FOMC meeting that his remarks could go in one of two directions: a “big-picture speech” or a “more traditional set up for all the action we’re going to have between September and December.” See our full preview Justin Weidner here: Fed Notes: Jackson Hole preview: Staying on the summit or trekking a Economist path back to target?

As it often seems to do, this year’s gathering occurs against a challenging policy Amy Yang Economist backdrop for the US central bank. Inflation remains elevated for the sixth consecutive year, and officials have begun to actively debate whether tighter policy is required to bring it back to target. This “good family fight”, in Warsh’s words, resulted in three dissents at the July meeting in favor of a rate hike. In addition, Warsh’s comments during the July presser raised questions about the Committee’s willingness to raise rates in response to persistent inflationary pressures, triggering a rise in longer-term inflation expectations and bond yields.

If Warsh sticks to big picture topics, we see the task forces and AI as most likely focal points for his comments. On the former, uncertainty remains about many of the specifics of the task forces: the scope within each topic, how the task forces interact with the FOMC and staff, when specifically they will report their findings / recommendations, and how those conclusions will ultimately be translated into framework changes for the Fed. On the latter, Warsh could repeat some of his optimistic views around the medium-term economic implications of what he has called “as important a change in the economy and business and households that we’ve had in my adult lifetime.”

If, instead, he decides to delve into more policy-relevant topics – less likely in our view -- we see a few possibilities. First is to clean up remaining uncertainties around the inflation objective (2% PCE inflation) and tools (policy rate versus balance sheet) that would be used to achieve that. Second, is a broad description of how officials are viewing inflation dynamics, given that this is the primary driver of policy decisions in the near-term. Within this discussion Warsh could reference the two scenarios detailed in the minutes to the June FOMC meeting, namely one in which inflation “soon” dissipates and another in which inflation remains elevated. Third, how the Committee views the implications of evolving financial conditions and recent volatility in long-term interest rates for monetary policy, particularly given his focus on signals from bond markets for monetary policymakers. Related to this, the market will continue to focus on any news out of Treasury related to debt management policies after last week’s surprise announcement of increased buybacks (see a note from our colleague Steven Zeng: Fixed Income Blog: The element of surprise ).

Deutsche Bank Securities Inc. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.

21 August 2026 US Economic Notes

Prior to Warsh’s speech, we will receive important information on inflation that could influence the outcome of the September FOMC meeting. Recall that the July FOMC meeting minutes revealed that “many” participants anticipated a need to tighten policy if inflation fails to quickly decline. Given this backdrop, market participants will heavily scrutinize Wednesday’s core PCE print. Based on the recent CPI and PPI reports, we are tracking 0.18% month-over-month for July core PCE, which would correspond to a 3.22% year-over-year growth rate for the Fed’s preferred inflation metric. If our…