The Dummy's Guide To The Chairman-Less Jackson Hole Agenda
In the past the Jackson Hole conference very much revolved around the Fed chairman with the opening remarks often the top (and most market-moving) news from the junket. Despite an interesting docket of speakers and presenters from a central banking perspective (as BofAML details below), with no major Fed officials scheduled to speak (and only Kuroda turning up from the rest of the major world central banks), the markets are likely to pay a lot less attention to Jackson Hole than in the past.
The Kansas City Fed’s annual Jackson Hole Symposium convenes from August 22 to 24 this year, and the agenda is now available. Three things are notable:
As expected, there is no keynote address: neither Chairman Ben Bernanke nor Vice Chair Janet Yellen is giving a keynote address. Stan Fischer (former Governor of the Bank of Israel) is chairing the conference on the first day and Yellen on the second day. However, in the past this job has been administrative and does not include a speech.
The conference theme is the “Global Dimensions of Unconventional Monetary Policy” and it is loaded with interesting topics, including “The Natural Rate of Interest, Financial Crises and the Zero Lower Bound,” “The Transmission of Unconventional Monetary Policy,” “Monetary Policy Options and Tools,” “Global Liquidity,” and “Cross-Border Capital Flows.”
Some other notable players are missing: ECB President Mario Draghi, BOE Governor Mark Carney, and most of the FOMC members are not attending, although BOJ Governor Haruhiko Kuroda will be there. Many former Fed governors are no longer invited. And most of the chief economists at major financial firms do not attend.
A chairman-free event
In the past the conference very much revolved around the Fed chairman. The peak in this “cult of personality” was the 2005 conference on “The Greenspan Era: Lessons for the Future.” Since then, Chairman Bernanke has worked overtime to present Fed policy as a committee decision and lower his profile at the conference. This year he is skipping it altogether. At the June post-FOMC press conference, Bernanke said:
“I think there’s a perception that the Jackson Hole conference is a Federal Reserve System-wide conference. It’s not. It’s a conference sponsored by one of the 12 Reserve Banks. Every one of the 12 Reserve Banks has conferences, has meetings, and this is the one I’ve gone to the most of probably any of the Reserve Banks, so I think it’s not inappropriate to go to different conferences, different meetings, and to essentially meet all the constituents that I have in these different Reserve Banks. So that’s one reason [for not attending Jackson Hole this year], certainly.”
It is too early to know whether Bernanke’s precedent will continue in the future. The conference started back in 1978, but the chairman (Greenspan at the time) did not headline the event until 1991. Over the years, the chairman’s speech has increasingly moved the markets. However, often there is 20-20 hindsight in how market participants interpret the message. In many cases, an ambiguous speech with small market effects later becomes “a clear signal” of a big policy shift. For example, in 2010, Bernanke allegedly signaled QE2 at Jackson Hole, but in fact he gave an ambiguous cost-benefit analysis of QE and the bond market was basically flat over that weekend.
A non-readers’ guide
The chairman’s opening remarks almost always have been the top news out of the conference. Some of the papers can get some headlines, but it is hard to connect the dots from an academic paper to the near-term policy outlook. Nonetheless, this conference is loaded with topical papers that could gather some attention. Based on the titles of the sessions, we would suggest looking out for the following:
“The Transmission of Unconventional Monetary Policy” by Arvind Krishnamurthy at Northwestern is scheduled for Friday morning. The effectiveness of QE versus forward-guidance is a hot topic of debate on the FOMC, especially as most Fed officials now appear to favor the latter over the former. An argument for a limited impact of QE would likely be interpreted by the markets as suggesting the Fed should (and will) taper quickly and end QE3 sooner rather than later. Any discussion of the relative merits of MBS versus Treasury purchases would also garner attention.
A panel discussion on “Monetary Policy Tools and Options” will be held Friday morning, but the applicability to the Fed may not be clear, as there are two EM participants (the Governor of the Bank of Mexico and an academic from China) and the research director from the ECB. We would expect this discussion to be anti-QE and pro-forward guidance, on balance, given the participants.
The global dimension of QE policy will likely be addressed by two papers on Saturday: “Global Liquidity” by Jean-Pierre Landau of Princeton and “Cross-Border Capital Flows” by Hélène Rey of London Business School. As the Fed does not wish to be the central bank of the world, international spillovers are unlikely to move the debate on the FOMC, but commentary on either of these papers may get some notice, particularly in the FX market.
The panel discussion on Saturday features the Governors of the central banks of Japan and Brazil and the deputy governor of the Bank of England. No topic has been given, suggesting the potential for a wide-ranging discussion that is likely to generate at least a few headlines.
Despite an interesting docket of speakers and presenters from a central banking perspective, with no major Fed officials scheduled to speak, the markets are likely to pay a lot less attention to Jackson Hole than in the past. The biggest effect may be on vacation rentals that third week of August.
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