The Jackson Hole Economic Symposium—an annual event attended by bankers, economists, and monetary policymakers—convenes this week for a three-day gathering from Aug. 22 to Aug. 24 in Jackson Hole, Wyoming. It could set the stage for the Fed loosening policy and laying the groundwork for a September interest rate cut.
The theme for this year’s symposium, hosted by the Kansas City Fed, will be “Reassessing the Effectiveness and Transmission of Monetary Policy.”
Officials are expected to concentrate on unwinding the Fed’s restrictive monetary policy stance of the past two-plus years, with the institution shifting from inflation-data-dependent to labor-data-dependent.
On Aug. 23, when he is scheduled to deliver an address at 10 a.m. EDT, Fed Chair Jerome Powell is expected to strike a more dovish tone than in previous years and hint at a coming interest rate cut.
Powell may reiterate his comments of the past few months: Economic activity is robust, the central bank is gaining confidence that inflation is returning sustainably to the Fed’s 2 percent target, the labor market is coming back into better balance, and the economy is on track to achieve a soft landing.
For nearly 50 years, the symposium has been a staple for the Federal Reserve, initially starting as a conference focused on agricultural trade.
The Jackson Hole retreat was not considered a critical affair until 1982, when then-Fed Chair Paul Volcker appeared and adjusted the event’s focus beyond agriculture. Several years later, when then-Fed Chair Alan Greenspan presented a speech on “Monetary Policy Issues in the 1990s,” alongside several of his central bank counterparts, the symposium was cemented as a landmark meeting for the Federal Reserve System.
Rate Cut Debate
It has been two years since Fed Chair Jerome Powell presented a hawkish stance and sounded the alarm that higher inflation-fighting interest rates would “bring some pain to households and businesses.”“These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,” the U.S. central bank chief said at the annual Jackson Hole economic policy symposium in August 2022.
Since then, the annual inflation rate has eased from a peak of 9.1 percent to below 3 percent. The U.S. labor market has been solid, and economic growth has remained intact.
Now that inflation is cooling and the unemployment rate has edged up to its highest level in nearly three years, the Fed is poised to pivot on monetary policy and become the latest major central bank to announce a rate cut.
![A trader works, as a screen displays a press conference by Federal Reserve Board Chairman Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange on Dec. 13, 2023. (Brendan McDermid/Reuters)](/_next/image?url=https%3A%2F%2Fimg.theepochtimes.com%2Fassets%2Fuploads%2F2023%2F12%2F14%2Fid5546939-2023-12-14T111346Z_1_LYNXMPEJBD0EN_RTROPTP_4_USA-STOCKS-600x400.jpg&w=1200&q=75)
That said, it remains to be seen how quickly the Fed will lower the policy rate from its 23-year high of between 5.25 percent and 5.5 percent.
The Fed’s updated Summary of Economic Projections (SEP)—a quarterly report that features officials’ projections for rates, gross domestic product growth, the jobless rate, and inflation—will be published in September and could offer insight into where interest rates could be headed over the next 12 months.
In June, the SEP revealed that policymakers trimmed their rate cut forecasts for 2024 from three to one.
Even after the three-day market crash that transpired earlier this month, the financial markets will probably prefer a quarter-point cut, according to Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
What Fed Officials Are Saying
For now, officials might be squarely focused on the September policy meeting.“I’m open to something happening in terms of us moving before the fourth quarter,” he said.
Fed Gov. Michelle Bowman said she is concerned that the United States still faces upside inflation risks.
The rate-setting Federal Open Market Committee will hold its next two-day policy meeting on Sept. 17 and 18.