Key Takeaways
- Federal Reserve officials and their global colleagues often deliver remarks at the Jackson Hole Symposium that have implications for interest rates.
- Federal Reserve Chair Jerome Powell’s speech on Friday will command attention, along with remarks from European Central Bank President Christine Lagarde.
- Powell is expected to discuss the Fed’s path forward on interest rates and likely address proposed changes to the central bank’s framework for economic analysis.
The investment world will turn its attention away from Wall Street and toward Wyoming this week.
Some of the world’s leading economists and monetary policymakers will meet for the 48th annual Jackson Hole Economic Symposium. The long-standing conference has often served as an opportunity for key officials to make public statements that have implications for Americans’ wallets.
This year is no exception. Markets and economists will closely follow Federal Reserve Chair Jerome Powell’s remarks on Friday. Powell is expected to address potential next steps for the central bank as it decides whether or not to cut its influential interest rate.
Several other policymakers are expected to speak at the three-day event, which brings together representatives of central banks from nearly 40 countries to meet with other business and economic leaders. This year’s theme is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”
Sponsored by the Kansas City Federal Reserve, the meeting has been hosted at Jackson Lake Lodge for most of its history. The National Park Service provides a mountain backdrop for the 120 people who attend every year.
Here’s more about what to expect from this year’s symposium.
Fed Chairs Have Made Important Remarks During Historic Periods
When former Federal Reserve Chair Paul Volcker spoke at the event in 1982, he shifted the conference’s focus from agricultural issues. He started a tradition of the Fed chief addressing the meeting each year.
Over the years, the meeting has featured important speeches that have marked a turning point for the economy. Volcker used his remarks to defend his interest rate policy as the central bank fought record inflation in the early 1980s, while former Chair Alan Greenspan addressed issues with the 1990s tech bubble when he spoke there.
Amid the 2008 financial crisis, then-Chair Ben Bernanke addressed key monetary policy issues at the conference.
The conference is no longer focused solely on U.S. economics. European Central Bank President Christine Lagarde is among the speakers scheduled for this year’s conference.
Interest Rates Will Likely Be at the Top of the Agenda for Powell
Powell’s comments will focus during this year’s conference as investors await clarity on the Fed’s policy path ahead.
Recent inflation readings have shown price pressures remain above the Fed’s target of 2%, while worries about a weakening labor market intensify. While most investors believe the Federal Reserve will make its first interest rate cut when it next meets in September, Powell’s comments could provide some insight into how the board will move.
“With markets pricing in a quarter-point cut for September, and some even expecting a bigger move, the Fed chief will use this platform to appropriately set forward guidance and outline his views on inflation and the labor market,” wrote BMO Senior Economist Priscilla Thiagamoorthy.
Powell Expected to Weigh In on Fed’s Decision-Making Playbook
Powell will also likely address another key issue for the Federal Reserve. The title of his speech indicates he will discuss the central bank’s framework for analyzing and acting on economic data.
The Fed’s policymaking committee updates the framework periodically; the most recent iteration was established in 2020. So far this year, the Fed has been analyzing its current strategy and taking feedback. It is looking to complete its review by late summer and will then assess its findings.
A team of analysts at Deutsche Bank wrote that the current framework may have slowed the Federal Reserve’s response to the 2022 spike in inflation. They said that could influence Powell’s take on the framework.
“[We] expect Powell’s speech to call for rolling back the 2020 modifications,” the note said.