The stakes are high for Powell and the Fed at Jackson Hole

WELCOME to Jackson Hole week. It’s a week in which Wyoming, better known for its spectacular landscapes, becomes the centre of the policy world as it hosts a large group of central bankers, academics and media. The gathering, organised by the Federal Reserve Bank of Kansas City, discusses recent economic and financial developments, policy issues, and the implications for central banks.

The session that inevitably attracts the most attention is when the chair of the Federal Reserve, the world’s most powerful central bank, takes to the stage on Friday (Aug 23) morning to share views on issues of their choosing. This is not the only session that is remembered and referred to over time since the papers presented lend themselves to many interesting discussions. Some individual contributions have, over the years, had a lasting impact, such as that of University of Chicago Professor Raghuram Rajan. Still, year after year, it’s the chair’s speech that attracts the most references – just mention Bernanke 2010 or Powell 2022 to central-bank watchers.

This year’s presentation by chair Jerome Powell is eagerly awaited due to the economic fluidity and financial volatility that the United States has been experiencing, and its spillovers to the rest of the world. It comes in the context of an ocean of genuine uncertainty, both domestic and global, that’s amplified by the erosion of three key anchors of stability: steady and predictable economic growth, effective forward policy guidance, and only small pockets of technical vulnerability involving over-leveraged positions and excessive risk-taking by market participants.