Every Fed Meeting Is Now 'Live,' Pimco's Clarida Says

Summary

Pimco's Richard Clarida assesses the Fed chair's Jackson Hole speech as hawkish, arguing the Fed is prepared to hike if inflation does not improve and that every FOMC meeting, including September, is live. He also says the Fed remains anchored to its existing 2% PCE target and is not treating recent inflation improvement as a trend. The main market implication is elevated front-end Fed hike risk.

• Clarida sees the 'work to do' line as a deliberate hawkish signal.
• Every FOMC meeting, including September, is viewed as live for a possible hike.
• The Fed chair does not see recent better inflation data as a confirmed trend.
• The existing 2% PCE inflation target remains the Fed's benchmark.
• The Fed wants better inflation measurements and forecasts rather than a target overhaul.
• Clarida says the Fed is prepared to hike if inflation does not show additional improvement.