The Federal Reserve Bank of Kansas City’s annual economic symposium, held in Jackson Hole, Wyoming, is coming to a close.
Here are some key takeaways from the conference:
Powell’s Axis
Federal Reserve Chairman Jerome Powell’s widely anticipated speech confirmed expectations of a rate cut at the central bank’s next meeting on September 17-18. boost stock prices And tanks.
“The time has come to adjust policy,” Powell said on Friday. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, evolving expectations and the balance of risks.”
Powell said he was more confident that inflation was on track to the Fed’s 2% target, while acknowledging an “unmistakable” slowdown in the labor market. “We do not seek nor welcome further slowdown in labor market conditions,” he said.
While Powell did not offer many details on how the Fed might proceed with borrowing costs after its September meeting, he stressed the need to focus on lessons learned from the central bank’s upcoming framework review.
International view
Powell wasn’t the only central banker to suggest that interest rates were on a steady path down.
Bank of England Governor Andrew Bailey said on Friday that while it was “too early to declare victory” over inflation, the risk of continued price pressures appeared to be easing. The British central bank cut its benchmark interest rate earlier this month, and his comments suggested it was heading toward growth. More confident About further interest rate cuts.
Meanwhile, several ECB Governing Council members who attended the conference said they would support another rate cut next month. That group included Olli Rehn of Finland, Martins Kazaks of Latvia, Boris Vujicic of Croatia and Mario Centeno of Portugal.
European Central Bank Reduced Centeno said the decision to ease monetary policy in less than three weeks was “easy,” given the data on inflation and growth.
The way forward
On the sidelines of the conference, a number of Federal Reserve officials provided updated views on the economy and hints about the future path.
Philadelphia Federal Reserve President Patrick Harker said interest rate cuts should be “MethodicalHe agreed that it was time to cut interest rates, adding: “Just start the process and keep moving forward.”
Susan Collins of Boston expressed similar sentiments on Thursday, noting that a “gradual and methodical pace” of cuts is likely to be appropriate.
Papers and boards
At its core, the three-day conference is academic in nature. Economists presented four papers, all on the theme of “Reassessing the Effectiveness and Transmission of Monetary Policy.”
Perhaps most relevant to the current economic moment—given the increasing focus on employment—is research by Pierpaolo Pennino of the University of Bern and Göte Eggertsson of Brown University. They conclude that the labor market slowdown is approaching a tipping point, where further slowdown could lead to a much larger increase in the US unemployment rate.
In a panel discussion on Saturday with Roberto Campos Neto of Brazil and Ida Wolden-Baasche of Norges Bank, ECB chief economist Philip Lane said a return to 2% inflation was “inevitable.”Not safe yetMeanwhile, Campos Neto said: Tight job market It has made the task of taming inflation a challenge.