Traders await Fed’s Jackson Hole conference

NEW YORK

Traders in markets are looking ahead to the Federal Reserve’s summer conference for signs of whether the U.S. central bank thinks inflation is under control or more interest rate hikes are needed to cool inflation.

Fed officials have used the Jackson Hole, Wyoming, conference in previous years to indicate changes in policy direction.

There “may be rude hawkish surprises” for investors who assume rate hikes are finished, said Tan Boon Heng of Mizuho Bank in a report.

Chair Jerome Powell “may allude to structurally higher (and potentially more volatile) inflation being the new norm.”

Some investors are shifting money to bonds as higher interest rates make their payout bigger and less risky.

Tech and other high-growth stocks are seen as some of the biggest losers due to higher rates. Several are down more than 10 percent from this year’s highs.

Data indicating U.S. consumer spending and hiring are unexpectedly strong have fueled expectations the Fed might feel pressure to keep its benchmark lending rate higher for longer.

Inflation has declined from its peak above 9% last year but still is above the Fed’s 2% target. Consumer prices rose 3.2% in July over a year earlier, up from the previous month’s 3% increase.

Economists say the last stage of getting inflation down to the Fed’s target may prove the most difficult.