What to know about the Jackson Hole Symposium this week

The exclusive Economic Policy Symposium, hosted annually by the Federal Reserve Bank of Kansas City, takes place this week, from the 24th to the 26th, in Jackson Hole, Wyoming. It's the 46th annual symposium this year, with the topic under discussion being "Structural Shifts in the Global Economy."

Each year since 1978, the Federal Reserve Bank of Kansas City has hosted a symposium to discuss a topic of vital importance to the economies of the United States and the rest of the globe. Since its inception in 1982, the symposium has been held annually at Grand Teton National Park's Jackson Lake Lodge.

In a typical year, there are around 120 attendees, who come from a wide range of professions and areas of expertise. However, the number of individuals who may attend is restricted, and only certain media outlets have been invited. Attendees are chosen on the basis of each year's theme, with extra consideration given to ensure geographical variety among those chosen to participate.

Several major and possibly long-lasting trends impacting the global economy will apparently be the focus of this year's subject. The purpose of the conference is to have conversations about these topics in a laid-back setting, fostering open discussion, in and around other sociable activities and meals.

Even though the impacts of the pandemic are beginning to subside, changes in trade networks and global financial flows will have far-reaching consequences for national and international economies. There are sure to be plenty of interesting conversations taking place this week.

Speeches to watch

The event this week provides the Fed with a unique sort of platform from which to announce policy outlooks in advance of their September meeting, and it can have a large and volatile impact on markets.

Case in point: stocks fell sharply last year after Fed Chair Jerome Powell implied in his remarks that the central bank was adopting a firmer than expected position, and would not be backing down in its battle against rising inflation. The Dow fell 3.03%, the Nasdaq closed the day down 3.94%, and the S&P 500 finished the day down 3.37%.

With this in mind, all eyes will be on Powell's policy address on Friday morning to see how hawkish the Fed really is, as treasury yields approach their highest level in 15 years. According to minutes released by the FOMC last week, a majority of members at the most recent meeting voted in favor of raising interest rates again, citing the persistently high rate of inflation and the risks that come along with it.

Several more recent reports have shown the CPI continuing to drop since then. However, the board is still anticipated to reiterate the message from the July policy meeting that inflation is too high and that the Fed is dedicated to reducing inflation back down to the 2% target.

Analysts and investors will be wondering whether the Fed will signal that it is encouraged by these most recent reports and at a point where it can initiate an extended pause. Or, alternatively, Powell may set the stage for additional rate hikes. The language he chooses to use will be key here.

The Fed increased its target interest rate to a range of 5.25% to 5.50% in July, the first time the rate has been that high since 2001. Its next meeting is scheduled for September 19th.

Also speaking on Friday is European Central Bank President Christine Lagarde, whose words will also be dissected for hints about the ECB's next action in September. Although economists still expect to see a further hike in interest rates next month anyway.

The Eurozone's economy has been stagnant for the last three quarters, and while inflation has begun to fall, it is still significantly over the 2% objective set by the central bank.

Continuing a downward trend that began in the fall of last year, consumer price increases slowed to 5.3% in July from 5.5% in June. Meanwhile, Eurostat confirmed preliminary estimates, showing that the price increase excluding food and energy, the underlying indicator widely monitored by the ECB, remained unchanged at 5.5%. In contrast, services inflation rose to 5.6% from 5.4%, which might be cause for concern given that salaries are a major factor in the pricing of services and that these prices have a tendency to be sticky.

Staying up to date

According to the Federal Reserve Bank of Kansas City, on Thursday, August 24th at 8:00 PM ET/6:00 PM MT, the entire agenda will be posted at External kansascityfed.org.

When Federal Reserve Chair Jerome Powell speaks on Friday, August 25 at 10:05 AM ET/8:05 AM. MT, it’ll be available to watch live on the Kansas City Fed's YouTube channel, youtube.com/kansascityfed. As papers and other materials are presented during the event, they will also be uploaded on the Kansas City Fed's website.