Key points:

  • The annual Jackson Hole Symposium is one of the key events in the world of finance, bringing together leading central bankers and economists.
  • The main topic of discussion is current issues of monetary policy.
  • Most analysts expect monetary policy to be eased, but do not expect specific plans from Powell at this symposium.

The annual Kansas City Federal Reserve Symposium, held in the picturesque Grand Teton National Park in Jackson Hole, Wyoming, consistently attracts leading central bankers from around the world. The event has become a key forum for discussion of global economic issues, attracting the attention of investors and the general public alike.

The speeches by senior representatives of global financial regulators, both formal and informal, often have a significant impact on the dynamics of financial markets.

Opening of the symposium

The annual Jackson Hole Symposium attracts a small group of experts from a variety of fields. The guest list of about 120 includes most members of the U.S. Federal Reserve, as well as central bankers from every continent. They are joined by economists, academics, government and international organizations, financial institutions, and journalists.

The full list of participants and the agenda for the event are traditionally kept secret until Thursday. The opening ceremony usually begins with dinner at the historic Jackson Lake Lodge, where attendees walk past a stuffed grizzly bear and into a room with panoramic mountain views.

The two-day academic program focuses on current monetary policy issues. This year’s theme is “reassessing the effectiveness and transmission of monetary policy.”

Despite the busy scientific program, participants find time for informal communication and outdoor recreation, taking walks in the picturesque surroundings of the lake.

Key event in Jackson Hole

The central event of the symposium will be the speech of Federal Reserve Chairman Jerome Powell, scheduled for Friday morning. All eyes, especially investors, will be glued to his words.

The market is eagerly awaiting more specific guidance on future monetary policy. Investors are hoping that Powell will clarify how much he thinks inflation has declined and whether this is enough to start a cycle of interest rate cuts at the next Fed meeting. They are also interested in how serious he thinks the threat of rising unemployment is and whether this will affect the size of a possible rate cut.

Most analysts are inclined to believe that the Fed will begin easing monetary policy in the near future. However, as Deutsche Bank experts note, Powell is unlikely to announce a specific action plan at the symposium in Jackson Hole. The Fed Chairman has repeatedly emphasized his commitment to data-driven policy, and there will be a plethora of new economic data to be released before the Fed’s next meeting, which will take place on September 17-18.

The strength of the symposium’s influence on US indices

The Jackson Hole Symposium, although not always, can cause significant volatility in financial markets.

In 2022, Jerome Powell’s speech, in which he warned of the potential negative consequences of fighting high inflation for the economy, led to a 3.4% decline in the S&P 500 index. However, predictions of serious economic damage subsequently didn’t come true.

In 2019, the 2.6% drop in the S&P 500 index after Powell’s speech was caused more by the escalation of the trade war between the United States and China than by his words.

In contrast, former Fed Chairman Ben Bernanke’s speeches in 2009 and 2010 became catalysts for stock market growth. In 2009, Bernanke was optimistic about the outlook for the global economy after the financial crisis, and in 2010 he promised additional stimulus measures. Both times, the S&P 500 index showed positive dynamics on the day of the speech.

Even when the market reacts relatively calmly to the speeches in Jackson Hole, the statements of central bankers can have long-term consequences. For example, in 2020, Powell’s announcement of a new approach to monetary policy, which implied less sensitivity to labor market overheating, was a notable departure from the Fed’s traditional policy.