In 1978, Kansas City Fed started organising an economics conference, and in 1982 moved the conference location to a valley named Jackson Hole (JH) in the Wyoming state. The annual conference has been held in the last days of August for quite some time now.
What Is the Jackson Hole Economic Symposium?
The Jackson Hole Economic Symposium is an annual symposium, sponsored by the Federal Reserve Bank of Kansas City since 1978, and held in Jackson Hole, Wyo., since 1981. Every year, the symposium focuses on an important economic issue that faces world economies. Participants include prominent central bankers and finance ministers, as well as academic luminaries and leading financial market players from around the world.
The symposium proceedings are closely followed by market participants, as unexpected remarks emanating from the heavyweights at the symposium have the potential to affect global stock and currency markets.
◾ History
Jackson Hole started as any other economics conference. The first four conferences were on agriculture, given the importance of the sector in this part of the US. In 1982, it organised the first conference on the monetary policy theme titled ‘Monetary Policy Issues in the 1980s’.
The 1982 conference was attended by then Federal Reserve Chair Paul Volcker, which set a precedent of sorts as most subsequent conferences were attended by the Fed chairpersons/senior officials. In 1982, the conference was attended by eminent macroeconomists and monetary policy scholars such as James Tobin (Nobel Prize in 1985), John Taylor (of Taylor Rule), William Poole (who became head of San Francisco Fed later), and so on.
In 1989, then Fed chair Alan Greenspan also made a speech at the conference. This added to its aura as now it was not just about the attendance of the US Fed chair but also about the remarks/speeches at the conference.
As linkages between monetary policy and financial markets deepened post-1990s, market participants started tracking the Fed chair’s remarks to figure the direction of the monetary policy.
Since 1982, the conference has been held 41 times including the 2021 edition. The theme has usually been around macroeconomics, monetary policy, long-term growth and policy, including the 2021 theme on ‘Macroeconomic Policy in an Uneven Economy’.
In 1990, the conference on ‘Monetary Policy Issues in the 1990’s’ had representations from the erstwhile USSR, Czechoslovakia and Yugoslavia, and Bulgaria.
Gradually, the forum was attended by governors and central bankers from major advanced economies in Europe and Asia. This led to the financial markets in these respective economies tracking speeches and remarks from both global central bankers and representatives of their country’s central banks.
◾With the top policymakers from the ECB and Bank of England skipping this year’s event, traders’ focus will be almost exclusively on the US Federal Reserve…
As my colleague Joe Perry noted in his Week Ahead report, Fed watchers and traders have been looking forward to this week’s Jackson Hole Symposium for months.
See an overview of the key details and themes to watch from this year’s Jackson Hole Symposium below:
Understanding Jackson Hole Economic Symposium
The Jackson Hole Economic Symposium is one of the longest-standing central banking conferences in the world. The mission of the event is to foster an open discussion. Attendees are selected based on each year’s topic, with additional consideration given to create regional diversity among attendees.
The Federal Reserve Bank of Kansas charges attendees a fee to cover the expenses associated with the symposium. About 120 people generally attend a year, representing a variety of backgrounds and industries. But attendance by participants is limited and select media is also invited. This not only helps keep the focus of the symposium on track, but also provides it with transparency.
Each year, the Federal Reserve Bank of Kansas selects a specific topic for the symposium and chooses a pool of attendees based on that topic. These experts write and present research related to the symposium’s theme. The bank posts the papers online, along with full transcripts from the event. Anyone who wishes to view them can do so for free online, or get a free printed copy after they are published.
Central Bank Balance Sheets and Financial Stability (2016)
In the wake of the global financial crisis, central banks worldwide used a variety of tactics to resuscitate their countries’ economies. While the traditional tactic of slashing interest rates to reduce borrowing costs was widely used, many central banks also took the more unconventional approach of beefing up their balance sheets by acquiring financial assets, such as sovereign, agency, and corporate bonds, and in some instances, stocks, in large quantities.
The Causes of Inflation (1984)
A major and ongoing consideration for central bankers, central banks try to stay ahead of inflation by setting interest rates to prevent disruptive rapid price increases. However, these days, preventing inflation isn’t as simple as it used to be. The global economy is awash in liquidity, normally an ignition source for inflation, as more money chases the same quantity of goods, leading to ever-higher prices, but inflation is nowhere to be found.
Markets to see:
As we noted at the top of this article, traders had this date marked on their calendars for months, so there’s at least a chance that Powell strikes a neutral tone and markets fail to see a large reaction. That said, the first place many traders will be looking is at Treasury rates. The short-term 2-year Treasury bond currently yields about 0.23% while the 10-year yield sits at 1.26%; any hawkish (up) or dovish (down) surprise could see a quick move in those rates.
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