Policy divergence between central banks learned in Jackson (amidst unprecedented structural changes)

At Jackson Hole, Chairman Powell clearly suggested maintaining the direction of interest rate hikes, and ECB President Lagarde depended on the data. The conclusions of the Federal Reserve and the ECB, which were struggling with the final rate hike, were divided.

Chairman Powell stated at the beginning and conclusion that “there is work left to be done in the Fed,” and emphasized the need for current interest rate hikes. However, it was also stated that interest rate hikes will be carried out carefully, and it is impossible to confirm with certainty the interest rate hike in September. Chairman Powell once again clearly stated that the price target is core PCE, and explained the three elements (goods, rent, and others). Core PCE fell to 4.3% from its peak of 5.4% last year. Although a peak out of inflation was confirmed, it was far from the target of 2%, and goods fell, but rents were declining due to interest rate sensitivity. Wages were the other main cause, and a weak labor market and an economy below the potential growth rate were necessary. They are stuck to the 2% inflation target, and interest rate cuts are unlikely until the core PCE 2% is visible.
Meanwhile, ECB President Lagarde depends on data on monetary policy, but there seems to be a high possibility that interest rate hikes will be suspended. This is because inflationary pressure is weak in the EU, and economic recovery is unstable. President Lagarde expressed the same view as IMF Managing Director Georgieva, who gave a speech on “policy divergence between central banks.” As the Fed continues to raise interest rates and the ECB stops, there is a possibility that the dollar will appreciate and the euro will weaken.
Central banks are searching for monetary policies in response to global structural changes (labor shortages, energy crisis, US-China divide). The current business cycle is thought to be different from the business cycle due to past inventory cycles. Since controlling inflation is the purpose of the Fed's monetary policy, interest rate cuts are unlikely until 2% of the core PCE is visible. In order for the economy to drop due to limited opportunities for interest rate hikes (interest rate hikes end after 1 time), there is no choice but to spend enough time or move to expand the range of interest rate increases again. Since Powell has already acknowledged that demand is suppressive even with an inflation peak out and current policy interest rates, there seems to be a high possibility that the former (it will take a long period of time until interest rates are cut).