Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Jackson Hole’s Greatest Hits Justify Obsessing Over Fed Meeting

EconomyAug 22, 2019 06:43AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

Every August, investors around the world obsess over what’s going on in a tiny Wyoming resort on the edge of the magnificent Teton mountain range. They have good reason to do so.

Over the past two decades, central bankers have used the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole to plot out and signal changes in monetary policy.

With global recession fears growing and bond yields tumbling, this week’s gathering is one of the most anticipated in years.

Fed watchers expect Chairman Jerome Powell to suggest that the central bank is ready to reduce interest rates further when he delivers the opening address to the conference on Friday.

Here are some highlights from recent gatherings of the central bank clan in Wyoming:

European Central Bank President Mario Draghi laid the groundwork for quantitative easing in his address, warning that inflation expectations had deteriorated and assuring his audience the ECB “will use all the available instruments needed to ensure price stability.” The ECB launched QE the following year and bought over 2.6 trillion euros of mostly government bonds.

Fed Chairman Ben Bernanke signaled a third round of quantitative easing was on the table in his speech at Jackson Hole at which he defended the effectiveness of the Fed’s controversial bond purchases. Calling the costs of unconventional polices “manageable,” he said officials should not rule out their future use. The Fed launched QE3 the next month.

As the financial crisis raged, Bernanke frequently left the formal conference proceedings to discuss market developments with key lieutenants, including Fed Vice Chairman Donald Kohn and New York Fed President and later Treasury Secretary Timothy Geithner. “We tried to remain inconspicuous by leaving the conference at different times,” Bernanke recalled in his 2015 memoir of the period.

In his opening speech, Bernanke put an interest rate cut squarely on the table by recounting the toll that the slumping house market had taken on the economy and by stressing the importance of “well-functioning financial markets.” The central bank slashed rates by a half percentage point the following month, the first in a series that eventually lowered the Fed’s target to near zero.

In a symposium mainly given over to extolling the record of departing Chairman Alan Greenspan, University of Chicago economist Raghuram Rajan warned about excessive risk-taking by asset managers seeking to boost their compensation. Former Treasury Secretary Lawrence Summers sharply criticized Rajan’s paper for its “slightly Luddite premise.” But Rajan, who went on to become governor of India’s central bank, proved to be prescient as financial markets were engulfed by turmoil a few years later.

Then-Princeton University professor Bernanke and Mark Gertler of New York University made the case for the Fed pursuing a strategy of “flexible inflation targeting,” arguing that such an approach could achieve both macroeconomic and financial stability. In the event, the Fed did adopt a 2% inflation target in 2012, after Bernanke became chairman.

Jackson Hole’s Greatest Hits Justify Obsessing Over Fed Meeting

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Tom OKray
Tom OKray Aug 22, 2019 8:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Don't bet on further rate cuts unless the numbers start showing cuts maybe needs. Right now the numbers don't good job growth, increasing inflation, retail and wholesale sales are good. The indicators are not demanding a rate cutonly Trump is and his reason are politically motivated to help his re-election.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email