What to expect from Jackson Hole central banking conference

Jackson
Hole.
Kenneth
Keifer/Shutterstock

• The annual Kansas City Federal Reserve Bank symposium
  in Jackson Hole, Wyoming starts on Thursday.
• Every year the great and the good of global central
  banking and economics descend on the mountain resort to discuss
  the big issues of the day.
• This year’s symposium is focused on the topic of
  “Changing Market Structure and Implications for Monetary
  Policy.”
• It is Fed Chair Jerome Powell’s first as head of the
  central bank, and comes at a time when he is under pressure
  from President Donald Trump.

The great and the good of global central banking are on the way
to the exclusive ski resort of Jackson Hole in the remote US
state of Wyoming for one of the benchmark events of its calendar.

Every year, the Federal Reserve Bank of Kansas City — one of 12
city based outposts of the USA’s central bank — hosts the Jackson
Hole Economic Symposium, aiming to bring together central bankers
from the world over to discuss the biggest challenges facing the
global economy.

The symposium — which was first held in Jackson Hole during the
1980s to try and
lure then Fed Chairman Paul Volcker away from Washington DC with
the promise of good trout fishing alongside policy
discussions — has a different focus every year. Last year
attendees discussed “Fostering a Dynamic Global Economy.” This
year will be focused on the topic of “Changing
Market Structure and Implications for Monetary Policy.”

The event allows the world’s monetary policymakers to meet behind
closed doors and discuss the big issues of the day away from the
political glare of their everyday workings.

However, it also has an outward-looking role to play. Major
bankers almost always give major speeches and frequently signal
future policy intentions.

This year will be Federal Reserve Chair Jerome Powell’s first
time attending the symposium as the most powerful central banker
on the planet. It comes at a time when he is
facing stern criticism from President Trump over his willingness
to continue raising interest rates.

Trump is an avowed advocate of low interest rates and has
directly criticised Powell’s approach several times in recent
months, breaking with a longstanding convention that president’s
refrain from commenting on the actions of the Fed, which is
independent of government.

Fed
chair Jerome Powell.
Carolyn
Kaster/AP

In an interview with Reuters on Tuesday, Trump said he was

“not thrilled” by Fed chairman Jerome Powell’s decision to raise
interest rates and would continue to criticize the Fed if
interest rate hikes continued. It followed reports earlier in the
day that Trump had criticised Powell at a private GOP fundraiser.

Trump’s criticisms give Powell’s planned speech at the symposium
an interesting new dimension, although it is believed that Powell
is effectively ignoring the president and taking no notice of his
barbs. Powell will speak on Friday and is likely to give further
hints about coming interest rate hikes in the US.

The Fed has already raised rates twice in 2018 and is expected to
hike twice more before the year is out. September looks the most
likely time for the next rate hike, with another likely in
December if economic performance continues as expected. Powell
could hint at any changes to that guidance, however.

“I expect Powell to maintain the central bank’s line given the
continued performance of the economy and avoid being swayed by
Trump’s comments or being drawn into discussing the actions of
other central banks,” Craig Erlam, an analyst at OANDA, said in
an email earlier this week.