This week, Jay Powell, Federal Reserve chair, is in the spotlight — and pulpit. A year ago, he delivered a speech at that gigantic economic tribal gathering known as the US Federal Reserve’s Jackson Hole conference, pledging that inflation pressures would only be “transitory.”
On Friday morning he speaks again — and it is now clear that this “transitory” message was totally wrong. It remains uncertain if he will apologise, or admit the mistake. But what is clear is that any numbers Powell cites will prompt investors to reappraise their macroeconomic models and forecasts.
Fair enough. However amid this frenzy of number-crunching, investors should also take note of some intriguing research floating around the edge of the Jackson Hole meeting about the importance of storytelling in monetary policy.