Monetary policy

Why are markets focused on the Jackson Hole economic meeting in the US?

Analysts are waiting to hear whether the Fed will lower money prices in September and the future of its chairman, Jerome Powell.

BarcelonaWhat makes a meeting in a valley in the state of Wyoming, in an idyllic setting, so important? What makes the markets so focused on this annual gathering organized by the Federal Reserve Bank of Kansas City under the protection of the Rocky Mountains, which begins today, Thursday, and ends on Saturday? Interest during these August dates is always high, because this conclave is attended by central bank governors from the world's leading countries, along with finance ministers and business leaders. This is not surprising, because many pragmatic issues, such as whether mortgages will become more or less expensive and whether there will be more or less credit to invest in, depend on what is discussed at this meeting without ties and in a relaxed and discreet atmosphere, not only in the US but globally.

This year, there is even more anticipation than usual ahead of the speech this Friday by Federal Reserve (Fed) Chairman Jerome Powell, who is in the crosshairs of the unpredictable US leader, Donald Trump. The president of the world's leading economic power has long been pressuring him to lower interest rates, and also to remove him and control, or at least damage, the image of an organization that, in principle, enjoys complete independence.

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The next Fed meeting to decide on the price of money is on September 17. The prospects of a cut are increasing after having avoided it in previous meetings, although inflation is not entirely under control. The target is 2%, and the general price level experienced a 2.7% year-on-year increase in July, the same level as the previous month.

Trump wastes no opportunity to attack the Fed chairman. He insists that it is "too late" to cut rates and that this policy is damaging to the housing market. "Could someone please inform Jerome McCarthy-Tard Powell that he's seriously hurting the real estate industry? People can't get a mortgage because of him? There's no inflation, and all signs point to a major rate cut," the US president wrote on his Truth Social social network.

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In addition to knowing or intuiting from Powell's words what the next step in monetary policy will be, there are many expectations about the future of this leader so hated by Trump. His term as chairman of the Fed expires next May, and the unknown is whether he plans to fold without continuing as governor, as his predecessors have done, or stay on for a couple more years, to Trump's displeasure. The US president, who dreams of getting rid of them, found the winds blowing in his favor the moment Adriana Kugler abruptly left her post, when her position on the board of governors ended on January 31 of next year.

A pawn in the organization

So the chosen one was Stephen Miran, one of the greatest defenders of Trump's tariff policies and chairman of the White House Council of Economic Advisers. He's an important pawn in setting monetary policy, although it's only provisional until January. But it's not ruled out that Miran could renew his position on the board of governors, which has a fourteen-year term.

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In fact, when the time comes, Trump could even place his nominee in Powell's place. The process for choosing a new Fed chair is the same as for governors: the US president nominates a candidate and the Senate must ratify the candidate to serve for four years.

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The first meeting at what is now Jackson Hole was held in 1978 in Kansas City. The event didn't really take off until 1982, when it changed location to the current valley in the state of Wyoming. Those familiar with the history of this annual meeting say it's a very popular spot for fly fishing, and that was the draw for then-Fed Chairman Paul Volcker, a keen fan of the practice, to attend that year. His attendance attracted other members of the organization, bankers, and businessmen.

Those attending this meeting, including journalists, are subject to what are called the Jackson Hole RulesCompliance is simple: you may talk or write about what is said in formal conversations, but alluding to the content of informal conversations (lunches, dinners, outings, etc.) is prohibited. Those who violate this rule will not be invited back to the Kansas City Federal Reserve.