Jackson Hole, here we are. For days markets and investors have been waiting, eyes fixed on the resort at the foot of the Rocky Mountains, in one of the richest counties in the United States, where every end of August economists, central bankers, academics, financial market operators and representatives of the American government meet. At the Jackson Hole Economic Policy Symposium, organized by the Federal Reserve of Kansas City, the economic route of the year is drawn. The theme this year(from today to Saturday) is “the theme of themes”: ‘Reassessing the effectiveness and transmission of monetary policy’. After years, is it time to reverse course?
The main expectation is for Friday’s speech by Fed chief Jerome Powell. It is from there that clues are expected on the timing of rate cuts in the United States and then, in turn, on the rest of the world. A cut is almost taken for granted, but at what pace and to what extent is not yet clear. The next decisive Fed meeting is scheduled for September 18. The situation is uncertain. In July, Powell had assured that if inflation and the labor market continued to cool, the interest rate cut would be made by the end of the summer. At the beginning of August, the US unemployment data rose to 4.3% against the expected 4.1%, triggering uncertainty about the resilience of the American economy and the possibility of a rate cut in September. The markets responded with a deep red. Then the recovery, slowly. And last week, encouraging data on retail sales (+1% in July, better than expected) and inflation arrived to cool recession fears and restore optimism about the Fed’s moves. The market expects a cut of a quarter of a percentage point in September, but it hasn’t ruled out a 0.50% cut either.
The Federal Reserve’s late summer economic policy symposium (from 1978 in Kansas City and from 1982 in Jackson Hole) has always been the stage for significant announcements on the global economic and financial landscape. In 2014, the then ECB president Mario Draghi presented here in Jackson Hole the basis of the quantitative easing program to stabilize financial markets and promote economic growth in the Eurozone. In 2022, Jerome Powell confirmed the hard line for monetary policy and the stock markets around the world responded immediately by going down.
Of course, this year the words of the American central governor are even more in the spotlight. Powell certainly will not dictate the agenda in detail (there are still weeks and important data to go). But many expect more than the ritual photos under the Rocky Mountains. The markets expect at least a confirmation of the path indicated in July and a reassurance on the health of the American economy. And perhaps clues between the lines not only in the short term, especially facing months of “uncertainty”, with political elections at home and wars and geopolitical tensions around. This is why there is so much anticipation for Jackson Hole, again this year.
