Morgan Stanley believes that the key factor for the Fed's future policy will be the upcoming data on inflation and the labor market, rather than statements at the Jackson Hole symposium. Analysts note that weak employment data may distort the picture due to changes in population dynamics, while other indicators – working hours, income, hiring and unemployment – indicate that the labor market remains balanced. At the same time, compensation remains high, and the increase in hours worked in July signals a revival in demand. According to the bank's calculations, the equilibrium level of job creation decreased from 210,000 per month in 2023 to 130,000 this year and may fall to 70,000 by the end of the year. Although Jerome Powell may emphasize different aspects in his speech – the slowdown in employment or the persistence of unemployment – Morgan Stanley is convinced that it is the fresh data on inflation and the labor market that will set the trajectory of the Fed's policy. The bank predicts that the rate will remain unchanged in September, but calls this decision a «difficult choice.»
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