This week, the annual Jackson Hole Economic Policy Symposium will be held from August 25-27 in Wyoming, US. The symposium draws participants from central bankers, finance ministers, policymakers, academics, and other financial market participants worldwide. Among the highlights of the symposium are the remarks from the Fed Chair, Jerome H Powell, on Friday, August 26, 2022.
The financial markets will look for any cues from the Fed Chair’s remarks on controlling inflation and the upcoming benchmark interest rate announcement. The Fed uses the Jackson Hole symposiums to provide their outlook on the US and the global economy and to shed light on their monetary policy stance.
The major US stock indices have been down over the past five days, with the DJIA down 2.5%, the S&P 500 down 3.70%, and the Nasdaq Composite down 5.69%. The crypto markets are also down over the past 5 days, with the global crypto market cap falling about 12% around the US$ 1 trillion mark, as at press time.
The 2021 Jackson Hole symposium theme was “Macroeconomic Policy in an Uneven Economy”. In his opening remarks under the title “Monetary Policy in the Time of COVID”, Powell said: “The rapid reopening of the economy has brought a sharp run-up in inflation. Over the 12 months through July, headline and core personal consumption expenditures inflation measures have run at 4.2% and 3.6%, respectively—well above our 2% longer-run objective. Businesses and consumers widely report upward pressure on prices and wages. Inflation at these levels is, of course, a cause for concern. But that concern is tempered by several factors that suggest that these elevated readings are likely to prove temporary. This assessment is critical and ongoing, and we carefully monitor incoming data”.
To control rising inflation this year, the Fed raised its benchmark interest rate by 25 basis points in March 2022, followed by another 50 basis points hike in May 2022. June 2022 saw a 75 basis points interest rate hike, the most aggressive since 1994. This was followed by yet another 75 basis points interest rate hike in July 2022. The following Fed interest rate announcement is scheduled for September 21, 2022.
 
 
The crypto markets have been declining again this week. Depending on how hawkish the Fed Chair’s speech will be interpreted at this Friday’s Jackson Hole Economic Policy Symposium, they are likely to react further.