Investors today are looking to Wyoming, and it's not to book a national park getaway before the summer comes to an end. The annual Jackson Hole symposium hosted by the Kansas City Fed is underway, with Chairman Jerome Powell set to take the stage at 10 AM ET. The theme of the 2024 conference is titled "Reassessing the Effectiveness and Transmission of Monetary Policy," and could provide further clues on the magnitude of policy easing with the next cycle that's slated to start in September.
Some history: Back at Jackson Hole in 2020, Powell unveiled a policy of "
Flexible Average Inflation Targeting," which basically stated that the central bank would accept higher inflation to allow for a quick labor market recovery from the pandemic. As price pressures spiraled out of control in 2021, the Fed Chair doubled down on his infamous "
transitory" call before making a serious U-turn that led to an aggressive tightening cycle. A
technical recession ensued in the first half of 2022, but the U.S. economy has been resilient since then despite bearish fears and countless calls for a recession.
Here's a recap of Powell's Jackson Hole speeches The equation has changed in recent months as inflation moved closer
to the Fed's 2% target. Instead of putting a focus on the "price stability" portion of the central bank's dual mandate, attention has turned to the "maximum employment" part, given an uptick in the
unemployment rate. Add to that this week's
major downward revision in non-farm payrolls data, which was the biggest since the global financial crisis, and will give Powell plenty to talk about when discussing expectations for the broader economy.
SA commentary: "I believe the theme of this year's event suggests the possibility of more comprehensive discussions on how supply-side factors influence monetary policy," Analyst Justin Purohit adds in a
2024 Jackson Hole Preview. "While the restrictive effects of short-term rates are evident in certain areas, like credit conditions, the broader economy's continued growth despite these restrictive measures presents a puzzling challenge to traditional views on monetary policy transmission. I can see this paradox being a potential focal point at this year's symposium." (
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