The market focuses its attention on Jackson Hole, Wyomingwhere the main central bankers will begin to arrive this Thursday to participate in the annual symposium of the Kansas City Federal Reserve in what has become the most important economic meeting in the world.
The event attracts the attention of many investors and, depending on what those responsible for the monetary policy most influential globally, sometimes it can be a tough time for the markets.
Here are five key takeaways from the bankers’ meeting.
Hawks and Doves
In recent years, the list of about 120 invitees has included most of the Federal Reserve’s 19 policymakers and a few dozen central bankers from Europe, Asia, Africa and America.
Also attending are several dozen economists and officials from academia, government and international organizations, as well as some financial institutions, and a group of journalists. Details about each year’s attendees and the agenda will remain secret until Thursday evening.
Debate on the effectiveness and transmission of monetary policy
The program usually begins on Thursday with a dinner served under lights decorated with antlers in the historic Jackson Lake Lodge. Guests entering the private dining room pass a preserved grizzly bear in the lodge’s public lounge, which features a panoramic view of the rugged Teton Range.
The conference will run until noon on Saturday and will focus primarily on discussion of a series of academic papers. This year’s theme is “Reassessing the Effectiveness and transmission of monetary policy“.
Despite the sophisticated setting, many participants take time for a rock hike and some dress in cowboy boots and other Western attire.
Jerome Powell, the main attraction
The highlight of the event will be the speech given by the president of the Federal Reserve, Jerome PowellFriday morning.
Investors are looking to him for clearer guidance on whether he believes the inflation in the United States cooled enough to warrant an interest rate cut in September and if their concerns about the growing unemployment could make that first reduction a big one.
Economists of the Deutsche Bank They told Reuters that “it will be difficult for Powell to commit in advance to a particular path at Jackson Hole” as he has pledged to rely on data, with plenty of it due out before the Fed’s Sept. 17-18 meeting.
Stock market crashes
It’s not common for big market moves to occur during the Jackson Hole Symposium, but they do happen.
He S&P 500 lost 3.4%, in 2022, as Powell warned that taming the highest inflation in decades could bring pain to households and businesses. The S&P 500 index’s 2.6% drop on the day Powell spoke in 2019 was due less to his comments than to a rapid escalation of trade tensions between the United States and China.
Then-Federal Reserve Chairman, Ben Bernankecontributed to two stock rallies at Jackson Hole. In 2009, he predicted (erroneously, as it turned out) an imminent return to global growth after the global financial crisis, and in 2010 he promised that the Federal Reserve would step in with additional bond purchases if necessary, as it eventually did. The S&P 500 index rose 1.8% in 2009, and 1.6% a year later.
A symposium of traditions
The Kansas City Federal Reserve has held its annual symposium since 1978. Its initial focus was agriculture, but after a few years the organizers decided to broaden the scope of the meeting and try to attract bigger names.
In 1982 they moved the meeting to its current location to attract then Federal Reserve Chairman, Paul Volckera devotee of fly fishing, to join in. It worked: The banker showed up to the opening dinner still wearing his fishing gear.
Alan Greenspanwho led the Federal Reserve from 1987 until early 2006, initiated in 1991 what is now the hallmark of the annual symposium: a speech by the leader of the world’s most influential central bank.
Source: Ambito
