In the midst of global economic recession concerns and at a turning point in central bank policies around the world, the annual Jackson Hole Symposium will be held next week.

According to the schedule updated by the Federal Reserve on Thursday, Powell will deliver a keynote speech at the Jackson Hole Symposium at 10 a.m. Eastern Time on August 23 (10 p.m. Beijing Time on August 23). The theme of this meeting is “Reassessing the Effectiveness and Transmission of Monetary Policy”.

For Wall Street, the Jackson Hole Global Central Bank Annual Meeting hosted by the Federal Reserve of Kansas City every year is perhaps the most noticeable macro-monetary policy level.

Why is the Jackson Hole Symposium attracting so much attention from the industry? What impact will it have on the market?

Looking back in history, the answer is easy to find: delivering keynote speeches at the Jackson Hole Economic Symposium and revealing changes in monetary policy has always been a long-standing tradition for central bank governors, especially for the former chairmen of the Federal Reserve.

It should be noted that in recent years, whenever Powell's speech is around the Jackson Hole Symposium, huge fluctuations often occur in the US stock market.

For example, in 2022, Powell's speech scared the US stock market and the painful theme caused the three major US stock indexes to plummet by 3%-4% in just 9 minutes that day.

In 2023, there were also big fluctuations in the market. However, it happened on Thursday, the day before Powell's speech. That day, the Dow Jones Industrial Average fell the most in five months, and the Nasdaq fell nearly 2%.

Of course, one good news so far is that, except for the 2022 Jackson Hole that caused a stock market crash, this annual central bank feast is still generally favorable to the US stock market.

As shown in the following figure, since 1998, after the chairman of the Federal Reserve delivered a speech at Jackson Hole, the median increase of the S&P 500 index could reach 0.6%, and there were 70% of years showing an increase.

Setting the tone for the interest rate cut in September?

The market generally expects that the Federal Reserve will cut interest rates at its next meeting on September 17-18, but there are some differences in the interest rate cut. Although most economists expect a 25 basis points cut, some forecast agencies, including Citigroup and JPMorgan, expect the Federal Reserve to cut interest rates by 50 basis points.

Therefore, this meeting provides Powell with an opportunity to make the latest evaluation of the trajectory of the US economy and the prospects of monetary policy between the Federal Reserve's policy-making meetings in July and September. It is widely expected that Powell will give clues to the monetary policy in the keynote speech at the Jackson Hole Symposium.

Economists say that Powell will lay the groundwork for a rate cut in September at the Jackson Hole Symposium next week, with the actual rate cut expected to be determined by the August employment data to be released a week later.

Krishna Guha, Vice Chairman of Evercore ISI, said that Powell will set the tone for future monetary easing policy and tends to be "active" rather than "passive" regarding interest rate cuts. Specific details can only be determined after the August employment data is released on September 6. It said that the Federal Reserve currently prioritizes employment data rather than inflation data, and the upcoming employment data will determine how the Federal Reserve actively advances interest rate cuts.

Bank of America said that the Federal Reserve has sent signals to the market and the public for updating monetary policy intentions at the Jackson Hole Central Bank Annual Meeting many times. That is to say, this venue is more suitable for long-term framework discussions, just like the Federal Reserve's introduction of flexible average inflation targets during the epidemic.

Bank of America said that this time the easiest thing for Powell is to outline the current economic situation, just like he did at the FOMC meeting in July. The FOMC statement in July shows that the FOMC is “very close” or “close” to the turning point of monetary easing policy. A further signal may be whether Powell expresses more firmly that the committee hopes to avoid “unexpected weakness” in the labor market, rather than simply reacting to it after it happens.

In addition, some agencies have reminded that Haruhiko Kuroda, Governor of the Bank of Japan, will deliver a speech in Congress on August 23. If Powell responds to some traders' bets that the Federal Reserve will cut interest rates by 50 basis points at the Jackson Hole speech on the same day, the yen carry trade may become more aggressive.

After a year, this time Powell's Jackson Hole trip,

After a year,

this time Powell's Jackson Hole trip,

Will it be hawkish or dovish again?

Welcome mooers to leave a message in the comments section, we are waiting to see!

Editor/Somer