Aug 26, 2021 - Economy & Business

What to expect from the Fed's Jackson Hole summit

Illustration: Megan Robinson/Axios

Illustration: Megan Robinson/Axios

Federal Reserve chair Jerome Powell will speak on Friday. But anyone expecting an announcement on when the Fed will taper its QE asset purchase will likely be disappointed.

Why it matters: Powell has the power to move markets with his words. And so regardless of whether he addresses the timing of the taper, markets will be interested in what he has to say.

Driving the news: The theme of this year’s Economic Policy Symposium — held in Jackson Hole, Wyoming on Friday — is “Macroeconomic Policy in an Uneven Economy.”

State of play: Multiple Fed watchers Axios follows point to the most recent FOMC minutes that stated: “No decisions regarding future adjustments to asset purchases were made at this meeting.”

  • “That statement implies that Powell is in no hurry to front-run the FOMC and announce the timing, magnitude and roadmap of tapering operations that we expect to be announced in November and start in December,” RSM chief economist Joe Brusuelas says.

What they’re saying: JPMorgan economist Michael Feroli notes that because the theme of the symposium is targeting the “uneven economy,” Powell may elaborate on the Fed’s “broad-based and inclusive” employment goal.

  • In testimony earlier this summer, Powell acknowledged that “joblessness continues to fall disproportionately on lower-wage workers in the service sector and on African Americans and Hispanics.”

Climate change is another topic that some feel the Fed should address.

  • “The Fed knows that it will have to lay out the logic of how monetary policy and financial supervision will be formulated in light of the long-term risks to the economy linked to climate change,” Bruesuelas said.

Kristina Hooper, chief global market strategist at Invesco, thinks cryptocurrencies could be discussed. The concept of a central bank digital currency is of high interest lately, and Hooper notes "there is ongoing research momentum at the Fed."

What to watch: Powell will deliver his speech on Friday at 10am ET.

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