Every summer, the Wyoming mountains become the center of the economic world. The Jackson Hole symposium, organized by the Kansas City Federal Bank, is more than just an academic gathering: it is a phase on which the form of the main orientation of global monetary policy sometimes.
This year the reflector is even more intense. On Friday the Chairman of the Federal Reserve (Fed) Jerome Powell It is scheduled to deliver what will probably be his last speech in Jackson Hole as president of the US central bank.
Key event for markets
For several decades, Jackson’s sticks have been an event where central bankers have revealed changes in their strategy.
It is here that Ben Bernanke after the financial crisis in 2008 outlined his policy of quantitative release (QE) and Powell himself introduced a new framework for tolerance to higher inflation in 2020.
In other words, the words that are being spoken here are calculated, sometimes more than a formal decision taken at the Federal Meetings of the FOMC Committee (FOMC).
In 2025, the context is even more important. Markets want to know if Fed is ready to reduce its key interest rates as early as SeptemberHow the US economy monitors between the slowdown of employment and the revival of inflation associated with the new tariff of US President Donald Trump.
Three scenarios for Powell’s speech
Investors are considering three main possibilities of Jerome Powell.
- First option: Prepare to reduce rates. After several months of stagnation in the labor market, some Fed officials fear that further deterioration could lead to a full -fledged wave of unemployment. Powell could then indicate that release is immediate to support the economy.
- Second scenario: Cooling expectations. Inflation remains above 2% of the targetAnd new import taxes already support the increase in wholesale prices. Powell could insist on the alertness of the face of inflation risk and delay of any reduction in rates.
- Third option: Stay avid. Powell, a faithful “data -dependent” approach, could simply emphasize that the Fed was waiting for other indicators before deciding, thus maintaining tension until the September meeting.
Between economy and policy
In addition to the technical considerations, the Jackson Hole’s speech takes place in an electric political climate. Donald Trump multiplies his attacks on FedGo so far as to demand Powell’s resignation.
She has never been so independent of the central bank so questioned. On Friday, Powell could take advantage of the defense of the institution’s neutrality and emphasize that its decisions are based on economic analysis, not political pressure.
Why Jackson Hole matters outside the US
What is called in Jackson Hole is far beyond the American border. Fed elections are influenced by global financial markets, currencies and credit costs.
Cash release notifications would increase stock markets, but could also weaken the US dollar (USD). On the contrary, a firm attitude towards inflation would maintain pressure on bond yields and the emerging economies heavily indebted in dollars.
Inheritance to defense
This speech also has a personal dimension for Powell. After more than seven years at the head of the Fed wants to leave the image of a pragmatic chair, which concerns the balance between growth and stability of price.
Its last stint on Jackson Hole He could seize his place in the history of the central bank: a leader who, despite the unprecedented political pressure, tried to maintain the independence and credibility of the institution in the markets.
