"Fed Chair Yellen's speech at Jackson Hole should strike a moderately positive tone with respect to the near-term economic outlook.

While we do not expect Yellen to explicitly pre-commit to raising interest rates at the September 20-21 FOMC meeting, she will no doubt want to retain the optionality of hiking next month if economic and financial conditions permit.

To be sure, Yellen may couch any potential discussion of the near-term trajectory of interest rates within the context of a significantly lower terminal rate. The topic of this year's Jackson Hole Symposium is "Designing Resilient Monetary Policy Frameworks for the Future". Therefore, Yellen's speech will likely focus on some of the themes outlined last week by San Francisco Fed President Williams.

...We anticipate that Yellen's speech will outline the rationale for taking another step in the policy normalization process, but will also discuss the broader ramifications of a potentially lower equilibrium real rate".

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