Anyone who has flipped through newspapers or business television channels this week might have noticed two words on repeat: Jackson Hole.
They refer to the premier central banking conference of the year, which is held late each August at the Jackson Lake Lodge in Grand Teton National Park in Wyoming. This year’s conference kicks off Thursday and runs through Saturday.
To the uninitiated, it might seem weird that what is arguably the most important economic event in the world is held in remote Wyoming, two time zones away from the Federal Reserve’s Washington-based Board of Governors and 1,047 miles from its host, the Kansas City Fed. And the symposium itself is hardly your average conference. Loafers cede to cowboy boots. Attendees snack on huckleberry pastries (or swill huckleberry drinks) while discussing the latest economic papers.
But if Jackson Hole is a little bit incongruous, it is also unquestionably important, an invite-only gathering where paradigm-shaping research is presented and momentous policy shifts are announced. The event has long been an obsession on Wall Street.
This year will be no exception. Jerome H. Powell, the Fed chair, is scheduled to speak Friday morning, and markets are waiting anxiously to parse his remarks for even the slightest hint about how much the Fed might cut interest rates at its meeting next month — and how quickly central bankers will reduce borrowing costs after that.
Wondering how a monetary policy conference held at the tail end of August became such a big deal and why it has stayed that way? Curious whether this year’s Jackson Hole conference will matter for mortgage rates or job prospects?
Here’s everything you need to know.
They came for the fly fishing.
The conference happens in remote Wyoming partly because the area offers good fly fishing.
The Kansas City Fed first held the annual conference locally in 1978, but by the early 1980s, organizers were looking for a new location. The Fed system splits America into 12 districts, and Grand Teton National Park sits squarely within Kansas City’s region.
Back then, conference organizers hoped that the Fed chair at the time, Paul Volcker, would come to the event. Mr. Volcker was an avid angler. Jackson Lake Lodge is close to some snazzy streams. It was fate.
With its stunning Rocky Mountain backdrop and Mr. Volcker’s presence, Jackson Hole quickly became the Fed event of the year. Other reserve banks did try to unseat it: San Francisco “repaired this year to the Monterey peninsula,” The New York Times reported in 1985, while the Atlanta Fed tried for an “exclusive place in Sea Island.”
But Jackson Hole won out. Alan Greenspan spoke at the conference in 1989, kicking off a trend in which Fed chairs regularly appear on the program — and making the symposium a key point of focus for markets. Today, the event plays host to a who’s who crowd of global economists and central bankers. The guest list is kept relatively small: In recent years, it has averaged 115 to 120 attendees.
They stayed for the policy news.
In fact, the Wyoming symposium has become even more relevant in the 21st century, partly because the Fed chair often delivers a big policy message at Jackson Hole. The conference happens right at the end of summer, before the Fed’s September meeting, making it well timed for those announcements.
Mr. Powell has a history of breaking news at the event. In 2020, he used the conference to roll out the Fed’s new monetary policy strategy. In 2021, he laid out reasons that a brand-new burst of inflation might fade on its own.
And when inflation instead proved stubborn and the Fed began to fight it by raising interest rates, he used his 2022 speech to pledge that officials would keep at it until price increases were back under control — even if that slowed the economy in painful ways.
Powell’s speech is the key focus this year.
So far, the economy has held up even as inflation has come down steadily, and economists are expecting Mr. Powell to foreshadow that the Fed is likely to announce a start to interest rate cuts at its Sept. 17-18 meeting.
The Fed chair may avoid being more specific than that, economists think — an important jobs report is set for release on Sept. 6, so he won’t want to commit the central bank too fully at a moment when the outlook could change. The unemployment rate jumped in July, a worrying sign that has officials on edge about the possibility that the job market might be on the verge of cracking.
Given the coming data, Mr. Powell may not answer Wall Street’s biggest question: How quickly will rates come down? Traders are betting that the Fed will most likely make a normal quarter-point rate cut in September, while some expect a bigger half-point reduction, especially because the job market is slowing.
“He’ll say something that’s clearly consistent with a cut,” said Jan Hatzius, chief economist of Goldman Sachs. “But I don’t think he’s going to pin himself down on the size.”
What the Fed chair says could matter for jobs and mortgages.
What Mr. Powell says — and what the Fed does next — could determine whether the economy has a gentle economic comedown or a painful crash landing.
There are two big risks.
If officials cut rates sharply to keep the economy from slowing too much, it will lower the cost of borrowing across the economy, from mortgage rates to business loans. That could allow demand to heat back up. And while that would be a welcome development for businesses and would-be home buyers, it could allow inflation to get stuck at an elevated level if price increases are not yet fully under control.
But if officials move too slowly with rate cuts, the job market might slow down a lot, to the point that households pull back on spending and the economy falls into a recession — a hard economic landing.
Politics will be the elephant in the room.
Politicians care a lot about what the Fed does — especially in an election year. Nobody wants to inherit a recession. And incumbent presidents prefer low interest rates, which goose markets and the economy.
But the White House has no direct control over Fed policy. Presidents appoint the Fed’s seven-member board in Washington, including the Fed chair, but those officials must be confirmed by the Senate. And once they are in place, officials are insulated from politics and free to set policy as they see fit.
That does not prevent elected officials from talking about the central bank, though. Former President Donald J. Trump, the Republican candidate, has a history of commenting on Jackson Hole in particular.
When he was in office in 2019, Mr. Trump posted on social media immediately after Mr. Powell’s Jackson Hole speech, asking who was the “bigger enemy” — Mr. Powell or Xi Jinping, China’s leader.
And already this year, Mr. Trump has made a habit of talking about the Fed from the campaign trail, saying or implying that it would be political if it cut interest rates before the election, and at one point saying presidents should have a “say” in monetary policy (an assertion he later played down).
Central bankers say they ignore both political haranguing and elections when thinking about rates.
“They just don’t get dragged down into that muck,” said Julia Coronado, a former Fed economist and founder of MacroPolicy Perspectives, a research firm. Plus, a move in September would be unlikely to sway markets or the economy enough to be decisive.
“I don’t think presidential elections are won or lost on a rate cut, or a rate hike,” she added.