Tonight at 22:00, Federal Reserve Chairman Powell will deliver his last major speech in office at Jackson Hole. Financial markets seem to sense the impending changes, with the dollar strengthening, gold falling, and the S&P 500 index declining for five consecutive days, setting the record for the longest continuous decline this year.

There are reports that Powell may announce the repeal of the policy framework established in 2020. This framework allows the inflation rate to exceed the target of 2% for a certain period to make up for previous periods below the target, while adopting a more lenient attitude toward the labor market. This policy seemed reasonable at the beginning of the pandemic when the economy faced the risk of prolonged stagnation. However, the sharp rise in inflation in 2021 far exceeded the Federal Reserve's expectations, forcing it to reconsider its policy stance.

Now, the Federal Reserve seems ready to return to a more traditional policy framework, placing greater emphasis on controlling inflation, rather than unconditionally pursuing employment growth. In the medium term, this means that the Federal Reserve may adopt a more hawkish stance, being more sensitive to inflation while relatively tolerant of the job market.

This potential policy shift may lead to a slower pace and extent of future interest rate declines than the market expects. Even if rate cuts occur in the future, they may be passive and cautious, rather than a series of easing measures like in 2019.

Currently, the market's expectations for this conference are not consistent, which increases uncertainty. Regardless of the content of Powell's speech, it may trigger significant reactions in the market. Investors and economists will closely watch this speech for clues about the future policy direction of the Federal Reserve.