The Jackson Hole Symposium is an annual economic symposium held in Jackson Hole, Wyoming since 1981 by the Federal Reserve Bank. The 3-day event gathers around 120 prominent figures in the financial world including central bankers, finance ministers, academics and key financial market players from around the world. The symposium’s objective is to foster open discussion concerning economic issues, implications, policies and more importantly, what to expect moving ahead. Each year, a specific topic is selected that guides the discussion. Past symposium topics include Macroeconomic Policy in an Uneven Economy (2021), Implications for Monetary Policy (2020) and Challenges for Monetary Policy (2019).
Significance and Impact of Jackson Hole Symposium
The proceedings are followed closely by market participants as global equities and currencies are potentially affected, especially if there is any deviation in expectations from policy makers. This year would be the first in-person symposium held since the Covid-19 pandemic. On the back of the Jackson Hole Symposium came many seismic shifts in the macroeconomic environment including the post-Covid recovery world, runaway inflation, rising recessionary fears, and the Fed performing four rate hikes up to 225bp within a year. The focus this year is on “Reassessing Constraints on the Economy and Policy”.
US Fed Chair Jerome Powell’s tone is hawkish, he stated that the Fed is bent on fulfilling their mandate to restore inflation down to 2%.
What can we expect moving ahead?
- Stronger US Dollar
With clear signals that further tightening will occur, the greenback will continue its reign. - Further divergence for JPY
Despite the alignment across many central banks in the attempt to reign in inflation, Japan continues to remain as an outlier as Governor Kuroda maintains the BOJ stance to continue monetary easing and projects for inflation to approach the 2-3% band by end of the year. - Eurozone at risk
Even with a recession looming ahead, ECB will stay the course and is expected to maintain elevated rates for a period. When the situation becomes untenable for investors, funds will flow out of the equity and currency markets in the Eurozone, accelerating the devaluation of the Euro.