What was discussed at the Jackson Hole meeting?

The agenda of officials and economists who gathered for their annual meeting at the foot of the Teton Mountains in Jackson Hole, Wyoming, USA, was also intense this year.

The meetings last year were marked by fears over the Covid-19 outbreak and the war in Ukraine. This year, those problems have been replaced by concerns about inflation and the credibility of central banks.

INFLATION AND INTEREST MESSAGES

Policymakers from around the world attended the three-day symposium hosted by the US Federal Reserve. The authorities have urgently called for a plan to better understand and respond to the outlook that threatens to fuel supply shocks, higher prices, and increased volatility in financial markets.

The authorities also gave strong messages that it is still too early to declare victory over inflation and highlighted the possibility of further rate hikes. But signs that inflation is under control have raised expectations that officials are nearing the end of historic tightening campaigns.

GROWING INTEREST IN POWELL

On the other hand, the hawkish messages from the president of the US Federal Reserve (Fed), Jerome Powell, in his speech expected by the markets increased expectations of a rise in interest rates in the short term.

Powell said inflation is still very high and they will raise additional rates if necessary and keep them high until they are sure they have met their inflation target.

After the speech, the dollar rose against major currencies, while gold prices fell.

INFLATION OUTLOOK WILL BE WATCHED

Experts said the Federal Reserve will also closely monitor the outlook for inflation and employment. The forecasts are that the cooling of the labor market will continue, which the Federal Reserve still considers too tight. The authorities will also make a new assessment of consumer inflation before their meeting on September 19-20.

Pacific Investment Management economist Tiffany Wilding, who provided assessments on the issue for Bloomberg, warned that it is “not unthinkable” that the Federal Reserve could pause for a while and then raise interest rates in 2024.

ORAL REFERENCES FROM AUTHORITIES

Highlights from speeches by other central bank officials were as follows:

Kazuo Ueda, Governor of the Bank of Japan, said inflation was still slower than the central bank’s target and they were continuing with their current expansionary monetary policy strategies. Ueda also described China’s recent economic slowdown as “disappointing.” He noted that the relative strength of the US economy gave Japan “some balance.”

Ben Broadbent, deputy governor of the Bank of England, said they will have to keep rates high for longer because inflation is unlikely to fall as fast as it seems despite sharp falls in gas and producer prices.

European Central Bank (ECB) President Christine Lagarde, unlike other presidents, gave no direction on rate hikes and was left out of the debate on whether the ECB should raise rates for a 10th consecutive month next month.