HomeBusinessWhat happens in Jackson...

What happens in Jackson Hole doesn’t stay in Jackson Hole | CNN Business

New York

Most of the year, people visit Jackson Hole, Wyoming, to ski, fly fish or simply enjoy the region’s vast natural beauty. But for three days in late August, the valley situated near Grand Teton National Park transforms into Woodstock for economists.

There, top economists from across the globe rub shoulders with one another and mingle with reporters and investors hungry for clues about their economic outlooks. But instead of the Grateful Dead, the headliner of the festival taking place from August 24-26 is Federal Reserve Chair Jerome Powell (who admits he is a Deadhead).

Powell took the stage at the 46th such festival hosted by the Kansas City Fed, formally known as the Jackson Hole Economic Symposium on Friday morning.

Inflation has slowed significantly since last year’s Jackson Hole conference, alongside glimmers of a cooling labor market. But it’s uncertain how long that will last without more rate hikes. It’s possible the Fed’s actions so far are insufficient to keep inflation slowing.

On the other hand, because there are lags between the time the Fed acts and when its actions are felt across the economy, there’s a risk the Fed will end up inflicting more pain than what’s needed to get inflation to the bank’s 2% target if it raises interest rates too high.

During their most recent meeting in July, Fed officials again said they felt the risks of not raising interest rates high enough to combat inflation outweighed the risk of inadvertently raising rates too high; hence, they opted for a quarter-point rate hike. That increase came after central bankers voted to hold rates steady in June, the first pause since they began hiking rates in the spring of 2022.

Traders are convinced the Fed will pause again at its meeting next month, according to the CME FedWatch Tool. But there’s much less of a consensus about the Fed’s game plan after September.

If history is any indication, Powell’s speech could usher in major policy changes, said Michael Cahill, vice president of foreign exchange research at Goldman Sachs.

Last year’s Jackson Hole conference was notable not just because it was the first time in two years that economists gathered in person. Powell used his keynote address to warn that Fed officials were going to be unapologetic in their fight against inflation, even if it meant inflicting “pain” on households and businesses. Two three-quarter-point rate hikes followed at the Fed’s subsequent meetings after Jackson Hole — and the central bank has continued hiking rates, albeit at a much slower pace, since then.

In recent history, there have been several other noteworthy speeches delivered from the Jackson Hole conference.

For instance, in 2010, then-Fed Chair Ben Bernanke used his time there to lay out “policy options for further easing,” said Cahill. “That was widely seen as a signal of additional quantitative easing,” he said. Quantitative easing, or QE, is when the Fed purchases bonds in an effort to bring interest rates down to stimulate the economy.

Months after Bernanke’s Jackson Hole speech, he unveiled a whole new phase of bond-purchasing in what has now become known as QE2. Then, in his 2012 Jackson Hole address, Bernanke said that labor market stagnation was a “grave concern.” He also said that the Fed’s QE2 showed positive net benefits. Shortly thereafter the Fed launched QE3.

In 2016, then-Fed Chair Janet Yellen, the current Treasury secretary, used her Jackson Hole address to prepare markets for more rate hikes, saying that she believed that “the case for an increase in the federal funds rate has strengthened in recent months.” Then, starting in December of 2016, the Fed hiked rates approximately every three meetings until 2018.

Like a music festival lineup, Jackson Hole has other headliners and smaller-stage events.

In fact, “it’s not always Fed speakers that are most in the limelight,” Cahill told CNN.

Bernanke’s speech wasn’t the only headline-making speech coming out of Jackson Hole in 2012. Michael Woodford, an economics professor at Columbia University, delivered remarks critical of the Fed’s reluctance to explicitly commit to keeping rates low to help the economy grow. His speech and the research findings he presented did not go unnoticed by the Fed.

The December 2012 post-meeting policy statement said that the Fed officials anticipated that “this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5%.”

“This shift was undertaken with the intent of helping the public better understand the Fed’s decision-making process in response to changes in economic conditions,” New York Fed President John Williams said in a 2013 column for VoxEU. At the time of publication, Williams had been serving as the San Francisco Fed president.

Central bankers from outside the US have also used their time on the Jackson Hole stage to signal policy changes.

Former President of the European Central Bank Mario Draghi highlighted in his 2014 remarks at Jackson Hole that inflation levels markets were pricing in were far too low. These remarks were widely seen as the starting point for more QE even after the ECB cut rates into negative territory, Cahill said.

A columnist for the Financial Times went so far as to say that Draghi “certainly stole the show this year [at Jackson Hole].”

No matter what comes out of the conference this year, it’s clear that what happens in Jackson Hole doesn’t stay in Jackson Hole.

This story has been updated from its original version on Friday at 8 am ET

Source link

Most Popular


Please enter your comment!
Please enter your name here

More from Author

Read Now

Team India Squad for T20 World Cup 2024 Announced: Here’s India’s official team for T20 WC – Republic World

India T20 World Cup squad announcement | Image:APTeam India's squad for the upcoming ICC T20 World Cup 2024 has been announced. On Tuesday, the selection committee led by chief selector Ajit Agarkar convened in Ahmedabad and zeroed in on a 15-member unit, which they deem is the...

Justice Minallah says state has to protect judges, independence of judiciary

Justice Athar Minallah on Tuesday said the state had to protect the judges and the judiciary’s independence as the Supreme Court took up a suo motu case pertaining to allegations of interference in judicial affairs.A six-member bench resumed...

Stock futures slip slightly as investors look ahead to Fed decision, megacap earnings: Live updates

Traders work on the floor of the New York Stock Exchange during morning trading on February 29, 2024 in New York City. Michael M. Santiago | Getty ImagesU.S. stock futures fell slightly Tuesday morning after a positive start to the week, as investors brace for megacap earnings,...

Europe’s Economic Laggards Have Become Its Leaders

Something extraordinary is happening to the European economy: Southern nations that nearly broke up the euro currency bloc during the financial crisis in 2012 are growing faster than Germany and other big countries that have long served as the region’s growth engines.The dynamic is bolstering the...

Trump’s Plans for the Fed Make No Sense, Even for Him

A second Trump administration might be very different from the first, and that includes how the president treats the Fed. Donald Trump complained a lot about the US Federal Reserve when he was president, jawboning for lower interest rates and questioning its competence. Yet at the...

Police to launch raids to find migrants to deport to Rwanda, Cabinet Minister claims

Police will mount raids to find missing migrants so they can be deported to Rwanda, a Cabinet minister has said.Health Secretary Victoria Atkins was commenting on reports that the Home Office has lost contact with thousands of people who are set to be removed from the...

The French #Metoo Scandal Unraveling in Weinstein’s Shadow

French actor Gérard Depardieu was ordered to stand trial for allegedly sexually assaulting two women on a film set three years ago, marking the latest legal escalation for the 75-year-old movie star who has become a central figure in France’s #MeToo movement.The announcement coincides with a...

Hong Kong Bitcoin and Ether ETFs Have Soft Debut

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired...

Customization Overview | Halo Infinite CU32

Operation: Banished Honor arrives on April 30 and you’re gonna want to look the part! After all, the Banished welcome all who pledge their service to Atriox, and your new allegiance and mindset demands a new outfit, so let’s find out more about the customization that...

T20 World Cup 2024 Squads: From India To Australia, Check Here Team-Wise Full Players List, Venues, Fixture, Timings And More

ICC T20 World Cup 2024 Cricket Matches Full Schedule: The T20 World Cup 2024 promises to be an exhilarating showcase of cricketing talent from around the globe. With teams from various nations competing for the prestigious title, fans can expect intense matches filled with thrilling moments...

How the Twins’ summer sausage celebration got made: It sparked the offense, but should they eat it?

CHICAGO — With Abe Froman unavailable, I called sausage expert Elias Cairo to address Rocco Baldelli’s concerns about a potentially hazardous pre-encased meat currently residing in the Minnesota Twins clubhouse.Nearly a week after it arrived and with the package showing visible signs of wear, tear and...