News on interest rates, Brexit expected at Fed conference

By Katie Murar, Medill News Service  |  Aug. 24, 2016 at 3:52 PM
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Washington, D.C. -- The annual Federal Reserve economic policy symposium that starts Thursday in Jackson Hole, Wyo., offers an opportunity for Fed Chair Janet Yellen to signal her intentions on interest rates but also for economic experts from around the world to examine the impact of Brexit.

"The Jackson Hole event has previously been a platform for the Federal Reserve to provide more clarity to the markets and warn about upcoming policy changes, something the market is currently in desperate need of," Craig Erlam, a market analyst for Canadian-based foreign exchange company OANDA, said in a Monday note.

Participants will be looking to Yellen, who missed last year's symposium, to discuss the central bank's Sept. 14 decision on interest rates in her Friday speech.

Erlam predicted that a September rate hike is unlikely, but Yellen has a "great opportunity this Friday to send a clear and concise message to investors."

"The markets currently have March priced in for the next rate hike, and if Yellen is seriously determined to move earlier, she must take advantage of Friday's opportunity to drive that message home," Erlam said.

Benjamin Iverson, a finance professor at the Kellogg School of Management at Northwestern University and previous Federal Reserve economist, said the conference probably will not affect the Fed's upcoming interest rate decision, but will have a hand in directing future monetary policy.

This year's conference topic is monetary policy tools for the future; central bank representatives from more than 40 countries are expected.

Iverson said the repercussions of Brexit will be a focal point.

"One of the more important and difficult topics is how to manage monetary policy when the world is becoming more and more integrated," he said. "For example, economic conditions in the U.S. are heavily affected by Europe and Asia, which gives the Fed less power to affect the U.S. economy."

Jackson Lake Lodge is to remain open to the public throughout the event, providing a relaxed atmosphere to the proceedings.

The first conference took place in Kansas City, Mo., in 1978, but moved four years later to Jackson Hole in an attempt to bring more attendees to the conference. Roger Guffey, then president of the Kansas City Fed, persuaded then-Fed Chairman Paul Volcker to attend, using his love for fly-fishing as bait. Since then, the event has become a popular and exclusive gathering for policymakers.

Previous Fed Chair Ben Bernanke used Jackson Hole to signal major shifts in policy in 2010 when he hinted at launching a second round of quantitative easing in order to boost economic conditions.

The three-day symposium kicks off Thursday.

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