Central bankers from around the globe gather later this week in Jackson Hole, Wyoming, but for once, the absence of the US Federal Reserve chairman means their annual get-together is not likely to spoil the summer vacation of traders on Wall Street.
Fed chief Ben Bernanke declined his annual invitation, breaking a 25-year tradition, while Fed vice-chair Janet Yellen – a top contender to replace Mr Bernanke in January 2014 – will only be moderating a panel.
As a result, there is no keynote Fed speech to open the conference and the chances of a deliberate effort to signal an upcoming change in US monetary policy have been lowered dramatically.
In other years, Mr Bernanke has used the venue to prepare financial markets for shifts in the Fed’s policy stance.
"In the past, the news that has come out of Jackson Hole has been because the principle presenters are in a position of policy prominence and it seems to be lighter . . . this year," said Carl Tannenbaum, chief economist at Northern Trust in Chicago.
Despite his absence, Mr Bernanke very likely will be at the centre of the chatter on the sidelines of the conference, as attendees ponder who will replace him when his term expires. US president Barack Obama has said both Ms Yellen and his former economic adviser Lawrence Summers are top candidates for the job and he will decide in the autumn. Mr Summers is also not attending.
Economists expect the Fed to start scaling back monthly bond purchases at its meeting next month, but as opposed to getting a steer from a speaker in Wyoming, they will have to rely on the minutes of the central bank’s July meeting – due to be released on today – to fine tune expectations.
That said, the event sponsored by the Kansas City Federal Reserve Bank will still be the best place to hear high-powered, informed debate about the latest thinking in global central banking.
This year’s conference focuses on unconventional monetary policy and the evidence on whether quantitative easing, forward guidance or a combination of both provide policymakers with the most firepower with interest rates cut to near zero.
The discussion is timely, coming just a few weeks after the Bank of England and European Central Bank followed the Fed by providing guidance on how long they would keep interest rates low.
Neither Bank of England chief Mark Carney nor ECB president Mario Draghi will attend this year, but Bank of Japan governor Haruhiko Kuroda will be there, while B of E number two Charles Bean and ECB vice president Vitor Constancio will also make the trip.
From a policy perspective, Mr Bernanke’s remarks opening the conference on the Friday morning have always grabbed the spotlight.
While the usual crop of senior Fed officials in attendance will speak to reporters on the sidelines of the conference, this time around that chatter is not likely to coalesce into a clear message on what to expect on policy. – (Reuters)
