Against a backdrop of the vast and jagged mountains of Wyoming, the big question facing central bankers from around the world when they meet at Jackson Hole tomorrow will be how to navigate the treacherous path of inflation.
All eyes will be Jerome Powell, chair of the US Federal Reserve, who will be delivering his keynote speech at the symposium on Friday and curbing inflation will be front and centre.
Powell is expected to confirm the Fed’s objective of lowering inflation by increasing rates. Indeed, a piece on the Financial Express website suggests that the goal of curbing inflation is such an imperative for Powell that he is willing to countenance a recession. According to the piece, the Fed is aiming to “hold the line in the face of a weak economy and weak labor market”, and it quotes Lou Crandall, chief economist of Wrightson ICAP, who has said recently that “inflation has gotten to the point where they [the Fed] have no choice but to accept that risk [of a recession]”.
Powell probably won’t deal in precise figures in relation to any proposed interest rate increase – the Fed will confirm this decision at their September meeting – though Reuters is reporting that an increase to 3.65 per cent is on the cards for early next year (according to US rates market pricing). The Fed’s goal is to bring inflation down to 2 per cent.
Other questions, such as that of quantitative tightening, the Fed’s plans for reducing its eye-watering balance sheet, and job figures, will be on the delegates’ minds. There is much for the 120 or so attendees to discuss…