Checkmate!

“While higher interest rates, slower growth, and softer labour market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”- Jerome Powell, Fed Chair, Jackson Hole 2022.

In the game of Chess, the player’s utmost aim is to propel checkmate on their opponent. Checkmate is the ultimate move where the player’s king is in check, and there is no escape or defence possible.

At Jackson Hole 2022, we witnessed a checkmate by the Fed, and the bond markets were dumbstruck to listen to Jerome Powell’s eight minutes of super hawkishness.

Powell’s Jackson Hole speech was a stunner in all aspects. Quoting Paul Volcker and his lessons from the 1980s, Powell seems to be worried and determined at the same time. I would like to draw y…