Speeches may hint at policy decisions

Continued from FP1

Bond markets will be quick to react if he does, especially in the U.S., where yields have remained low despite the Fed raising rates, in part because ECB policy continues to suppress yields in Europe.

Then again, a speech Draghi gave earlier this week in Germany, in which he largely spoke about the value of academic research on policy setting, doesn’t exactly suggest a big reveal in Jackson Hole.

Yellen’s speech will be similarly vivisected (in real time, no doubt). For what it’s worth, this might be her last Jackson Hole appearance. Her term as Fed chair ends next January, and its renewal is at the pleasure of President Donald Trump, who once accused her of keeping rates low as a sop to Barack Obama.

Now that Trump is in office, and has taken to bragging about he’s responsible for stock markets and employment reaching new records, maybe he’ll change his tune. In any event, Yellen will no doubt steer assiduously clear of any comment about her post-January future.

More important would be any hints about when the Fed might start the process of unwinding its US$4.5trillion balance sheet, which is chock full of bonds and mortgage-backed securities.

Maybe Yellen will say the Fed will get started in September, or October, or November. Or maybe she won’t mention it at all.

Fed-watchers will also be looking for signals about how fast and how far it intends to go in raising rates, but Yellen isn’t likely to say much that suggests a detour from the low-and-slow script most Fed governors have been reading from lately.

Which brings us to the conundrum: inflation. It’s low — well below the widely held two-per-cent target — and it’s getting lower. National Park Rangers stand silhouetted inside the lobby of Jackson Lake Lodge. The theme of this year’s symposium is Fostering a Dynamic Global Economy.