Each year in late August, falling overnight temperatures in western Wyoming send trout in the Snake River into a feeding frenzy before winter. These optimal fishing conditions first led Paul Volcker, former Federal Reserve chair and an avid fly fisherman, to host the Fed’s annual conference there. The Jackson Hole symposium convenes central bankers, finance ministers and economists to discuss monetary policy, network and, occasionally, cast a line.
Like the trout, the current Fed chair Kevin Warsh has a difficult few months ahead — and many market participants will be scouring his Jackson Hole speech on Friday for signals on how he plans to deal with them. The ongoing conflict with Iran injects uncertainty into markets, and oil prices remain above prewar levels. Inflation is running persistently above the central bank’s 2 per cent target. US government debt is climbing ever higher and is made more burdensome by higher yields.
The massive spending on the AI build-out appears to be pushing up borrowing rates, crowding out other sectors of the economy, and raising important questions for monetary policymakers. Treasury secretary Scott Bessent’s interventions in the bond market add an additional layer that threatens to complicate how monetary policy is set.