On Friday, August 23 at 10 a.m. Eastern Time, Federal Reserve Chairman Powell will deliver a speech on economic outlook at the Jackson Hole Economic Symposium hosted by the Kansas City Fed. The theme of this meeting is "Evaluating the Effectiveness of Monetary Policy and its Transmission."

The Jackson Hole Economic Symposium is one of the longest-running central bank conferences in the world. Participants from 70 countries gather annually to share different perspectives and experiences. It is definitely the "annual feast" of central banks around the world. The Jackson Hole Economic Symposium is hosted by the Kansas City Fed and is one of the most watched conferences other than the Federal Open Market Committee (FOMC) meeting of the Federal Reserve.

This year's Jackson Hole conference is held at the Jackson Lake Lodge in Grand Teton National Park from August 22 to 24.

The Jackson Hole Global Central Bank Conference has become a window for the Federal Reserve to indicate key points of monetary policy. Chairman Powell often attends the symposium and elucidates his stance on future monetary policy. Powell's speech continues the tradition of the Fed chair giving a theme speech during the three-day central bank conference.

With the Fed expected to cut rates soon, it is widely anticipated that the next meeting on September 17-18 will begin easing. However, there is much disagreement about the magnitude of the rate cut. Although most economists expect the Fed to cut interest rates by 25 basis points in September, some insiders from Wall Street banks such as Citigroup and JPMorgan predict a larger rate cut of 50 basis points.

The market is closely watching Powell's speech next week to find clues about his views on the US labor market and inflation. Previously, several labor market reports such as non-farm payrolls fell below expectations, and inflation showed a clear trend of further cooling, which has caused the market to pay more attention to the risk of the US economy falling into recession. However, Thursday's US retail sales and initial jobless claims data relieved many concerns.

Looking back at the 2023 Jackson Hole conference, the theme was "Structural Changes in the World Economy". Powell remained hawkish in his speech, stating that 2% is and will remain the Fed's inflation target, prepared to further raise interest rates when appropriate, and plans to keep policy rates at a restrictive level.

In fact, the July 2022 meeting of the Federal Reserve was the last rate hike of the current tightening cycle, during which the benchmark interest rate was maintained at 5.25%-5.50%. At the September 2022 meeting, due to data showing that US inflation continued to slow, the Fed chose to stand pat. Until the most recent July meeting, the Fed has kept the benchmark interest rate unchanged for the eighth consecutive time.

It is worth noting that in recent years, market turmoil often occurs around Powell's speech at the Jackson Hole conference. For example, in 2022, Powell's speech frightened the US stock market and caused the three major US stock indexes to plummet 3%-4% in just 9 minutes with the theme of "Pain". There were also some market fluctuations in 2023, occurring the day before Powell's speech on Thursday, with the Dow Jones Industrial Average experiencing the largest point drop in five months, and the Nasdaq down nearly 2%.

Editor/Somer