US: All eyes on Jackson Hole next week - Nomura

Research Team at Nomura, suggests that the Fed Chair Janet Yellen will give the keynote speech on Friday, 26 August at the Kansas City Fed’s Economic Policy Symposium titled “Designing Resilient Monetary Policy Frameworks for the Future”.

Key Quotes

“The FOMC minutes showed that the Fed staff gave a presentation on “Longterm Monetary Policy Implementation Framework” at the July FOMC meeting. It focused on operational aspects of monetary policy of other foreign central banks and the FOMC’s experience during the Global Financial Crisis. It seems likely that Chair Yellen will address these topics including the role of the Fed’s balance sheet in the long run and how they see the potential role of other policy tools such as negative interest rates.

In addition, Yellen may address broader questions regarding the FOMC long-term strategy. On Monday, President Williams argued that the economy is likely to need relatively low interest rates for the foreseeable future and that, in response, the FOMC should consider either raising its inflation target or switching to a policy of targeting the level of prices or nominal income. These are not new ideas and relatively recently Chair Yellen argued forcefully against them.

However, the performance of the US economy continues to disappoint; real GDP has grown at only a 1% pace over the last three quarters and the unemployment rate is essentially unchanged. That persistent underperformance may have prompted the FOMC, or some subset of the Committee, to begin considering significant changes in its long-term strategy. The full schedule of the symposium will be available at 8 p.m. EDT on 25 August.”