Jackson Hole
There is no bigger stage for the central bankers than the annual Jackson Hole Symposium. The Fed Chair skipped the last one, however, she is attending this year and is due to speak on Friday, which has captured the world’s attention.
Central banks losing control over the economic condition
Since the last financial crisis of 2007, the world markets look up to the central banks to save them from another economic downturn. The central banks have tried everything, right from zero interest rates to negative interest rates, but with limited success.
Policymakers across the world are now scratching their heads on what more can be done to achieve growth and stoke inflation. Many believe that the central banks have no tool left to tackle …show more content…
Williams writes. “This will necessitate a greater reliance on unconventional tools like central bank balance sheets, forward guidance, and potentially even negative policy rates. In this new normal, recessions will tend to be longer and deeper, recoveries slower and the risks of unacceptably low inflation…will be higher,” reports The Wall Street Journal.
Another proposal floated by him is to focus on nominal gross domestic product, the sum of inflation and real GDP growth instead of keeping an eye on the inflation target.
Attention shifting from monetary to fiscal policy
He has also pointed that there are “limits to what monetary policy can and indeed, should do. The burden must also fall on fiscal policy to do its part,” reports Market Watch.
However, these changes are not easy to implement, as they are only in the discussion stage. As Mr. Williams put it, “you don’t change horses in the middle of a stream,” and more so during the election year, with both the candidates focusing on reforming the Fed.
Nonetheless, the traders will be riveted to the Fed Chair’s comments, to gain an insight on the likelihood of the next rate
There is no bigger stage for the central bankers than the annual Jackson Hole Symposium. The Fed Chair skipped the last one, however, she is attending this year and is due to speak on Friday, which has captured the world’s attention.
Central banks losing control over the economic condition
Since the last financial crisis of 2007, the world markets look up to the central banks to save them from another economic downturn. The central banks have tried everything, right from zero interest rates to negative interest rates, but with limited success.
Policymakers across the world are now scratching their heads on what more can be done to achieve growth and stoke inflation. Many believe that the central banks have no tool left to tackle …show more content…
Williams writes. “This will necessitate a greater reliance on unconventional tools like central bank balance sheets, forward guidance, and potentially even negative policy rates. In this new normal, recessions will tend to be longer and deeper, recoveries slower and the risks of unacceptably low inflation…will be higher,” reports The Wall Street Journal.
Another proposal floated by him is to focus on nominal gross domestic product, the sum of inflation and real GDP growth instead of keeping an eye on the inflation target.
Attention shifting from monetary to fiscal policy
He has also pointed that there are “limits to what monetary policy can and indeed, should do. The burden must also fall on fiscal policy to do its part,” reports Market Watch.
However, these changes are not easy to implement, as they are only in the discussion stage. As Mr. Williams put it, “you don’t change horses in the middle of a stream,” and more so during the election year, with both the candidates focusing on reforming the Fed.
Nonetheless, the traders will be riveted to the Fed Chair’s comments, to gain an insight on the likelihood of the next rate