Vincent Reinhart*, Chief Economist at BNY Investments, has commented ahead of the Jackson Hole Economic Symposium.
“The Jackson Hole Economic Symposium is Woodstock USA for central bankers, except with slide decks, cowboy hats, and line dancing. Themed “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy”, the opportunity for discussion on AI, productivity growth and the conduct of monetary policy topics comes with timely relevance, given evolving labour market dynamics and the economic impact of border policies.
“In July, the FOMC’s statement was silent about future policy, with an understanding that Chair Powell would use the Jackson Hole platform to settle matters. Data on employment disappointed, and on prices was mixed. FED officials are likely concerned that employment growth might be close to stall speed. The back-up in consumer price inflation erased the progress of the first half of the year, but the incidence of tariffs was muted.
“We expect Chair Powell to signal that the Fed intends to cut its policy rate 25 basis points in September. Powell can frame this decision as either a bump in the road along the Fed’s longer-run plan to renormalize rates, or a shift to an entirely reactive mode.
“As this marks Powell’s last appearance at Jackson Hole as chair, he may reflect on his legacy and potentially the importance of central bank independence.”
* Previously Vincent spent 24 years at the Federal Reserve, holding several roles including Director of the Division of Monetary Affairs and Secretary and Economist of the Federal Open Market Committee (FOMC).
