We lived in a bubble, in a dream, and this dream in a bubble is bursting. We will keep at it until we're confident the job is done. All of these of things that got built up over the last decade are going to have to be dismantled or changed. The financial system globally has been built around extremely low, ultralow interest rates for 10 years. If the Fed puts us into a higher interest rate world, it will change everything. Restoring price stability will likely require maintaining a restrictive policy stance for some time. And that is when the markets reacts and says, “Oh, my God. What he calls “some pain” means putting people out of work. And I think his message was very effective. His remarks were remarkably brief for a Jackson Hole speech, and that was by design to deliver a very direct message. But a failure to restore price stability would mean far greater pain. These are the unfortunate costs of reducing inflation. While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. I think the chair’s objective at Jackson Hole was to deliver a very concise message that, "We know what our job is: Our job is to get inflation back down to 2%, and we're going to do what we need to do to get it back down to 2%." economy is clearly slowing from the historically high growth rates of 2021. And if you guys think that we're going to stop raising rates, or even cutting them, you are a bit delusional." Reducing inflation is likely to require a sustained period of below-trend growth.Īnd what Powell told them in Jackson Hole, he said, "Listen, inflation is still way too high, it's not peaking, it's not going to fall fast enough. The market is, I think, anticipating that they’re going to blink. market, so maybe they’ll just ease up a bit. The market started talking about a Fed pivot. The market were feeling in the summer that maybe the Fed would have a pivot, would stop raising rates and maybe start cutting them. Thank you, Peter, and good morning, everyone. Jackson Hole in 2022 was quite important. Is Powell ready to risk recession? This is the question.Ĭhair Powell, the floor is yours. The mood was more "for the first time, we're failing."
head, Indian Central Bank:Ĭentral bankers were saviors post-global financial crisis. Are they going to keep taking us down this road? Are they going to keep slamming the brakes on rates? Raising 75 basis points until we've got job cuts across the corporate sector?
We’re likely in recession and perhaps going deeper into it. So people looked to Jackson Hole to see, is there a reset in monetary policy? So Jackson Hole plays a very important role in the central bank community, because you're basically bringing the central bankers of the world and economists to a place to discuss critical issues. EL-ERIAN, Chief economic advisor, Allianz: He’s giving a speech as central banker to the world. And media comes from all around the world and the Fed chairman gives a keynote speech that gets all the attention. It's sort of like the Oscars of the Fed world. Now-ĬHRISTOPHER LEONARD, Author, The Lords of Easy Money:Įvery year the Federal Reserve holds an economic symposium at Jackson Hole, Wyoming, in August. It’s going to be a tough crowd at Jackson Hole because of the fact that he made a call simply last year that didn’t age well. Powell could take a harder line, or he could simply play his cards close to the vest. Powell and his colleagues at the Fed are under pressure to curb inflation. Federal Reserve Chairman Jerome Powell speaking at an annual economic summit in Jackson Hole, Wyoming.
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