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Why Jackson Hole Is the Fed’s Biggest Shindig
The Federal Reserve Bank of Kansas City’s annual conference in Wyoming gets a lot of buzz. Here’s why it matters for Wall Street and the economy.
Jeanna Smialek is an economics reporter who wrote this article from the lobby of the Jackson Lake Lodge ahead of the Fed’s big conference.
Anyone who has flipped through newspapers or business television channels this week might have noticed two words on repeat: Jackson Hole.
They refer to the premier central banking conference of the year, which is held late each August at the Jackson Lake Lodge in Grand Teton National Park in Wyoming. This year’s conference kicked off Thursday and runs through Saturday.
To the uninitiated, it might seem weird that what is arguably the most important economic event in the world is held in remote Wyoming, two time zones away from the Federal Reserve’s Washington-based Board of Governors and 1,047 miles from its host, the Kansas City Fed. And the symposium itself is hardly your average conference. Loafers cede to cowboy boots. Attendees snack on huckleberry pastries (or swill huckleberry drinks) while discussing the latest economic papers.
But if Jackson Hole is a little bit incongruous, it is also unquestionably important, an invite-only gathering where paradigm-shaping research is presented and momentous policy shifts are announced. The event has long been an obsession on Wall Street.
This year was no exception. When Jerome H. Powell, the Fed chair, spoke on Friday morning, he signaled that the central bank is poised to cut interest rates at its upcoming September meeting. It was the clearest sign yet that the Fed believes it is winning its war against rapid inflation: Officials had long said that they would begin cutting rates only when they had gained confidence that price increases were coming fully under control.
Wondering how a monetary policy conference held at the tail end of August became such a big deal and why it has stayed that way? Curious whether this year’s Jackson Hole conference will matter for mortgage rates or job prospects?
Here’s everything you need to know.
They came for the fly fishing.
The conference happens in remote Wyoming partly because the area offers good fly fishing.
The Kansas City Fed first held the annual conference locally in 1978, but by the early 1980s, organizers were looking for a new location. The Fed system splits America into 12 districts, and Grand Teton National Park sits squarely within Kansas City’s region.
Back then, conference organizers hoped that the Fed chair at the time, Paul Volcker, would come to the event. Mr. Volcker was an avid angler. While the conference itself does not involve fly fishing, Jackson Lake Lodge is close to some snazzy streams. It was fate.
With its stunning Rocky Mountain backdrop and Mr. Volcker’s presence, Jackson Hole quickly became the Fed event of the year. Other reserve banks did try to unseat it: San Francisco “repaired this year to the Monterey peninsula,” The New York Times reported in 1985, while the Atlanta Fed tried for an “exclusive place in Sea Island.”
But Jackson Hole won out. Alan Greenspan spoke at the conference in 1989, kicking off a trend in which Fed chairs regularly appear on the program — and making the symposium a key point of focus for markets. Today, the event plays host to a who’s who crowd of global economists and central bankers. The guest list is kept relatively small: In recent years, it has averaged 115 to 120 attendees.
They stayed for the policy news.
In fact, the Wyoming symposium has become even more relevant in the 21st century, partly because the Fed chair often delivers a big policy message at Jackson Hole. The conference happens right at the end of summer, before the Fed’s September meeting, making it well timed for those announcements.
Mr. Powell has a history of breaking news at the event. In 2020, he used the conference to roll out the Fed’s new monetary policy strategy. In 2021, he laid out reasons that a brand-new burst of inflation might fade on its own.
And when inflation instead proved stubborn and the Fed began to fight it by raising interest rates, he used his 2022 speech to pledge that officials would keep at it until price increases were back under control — even if that slowed the economy in painful ways.
On Friday, Mr. Powell used his speech to make it clear that Fed officials are poised to lower interest rates at their meeting on Sept. 17-18 as inflation slows. Policymakers are also monitoring the job market as they try to keep an economic soft landing intact.
“We will do everything we can to support a strong labor market as we make further progress toward price stability,” Mr. Powell said.
Fed officials will closely watch a jobs report on Sept. 6 as they try to figure out how the labor market is shaping up, and as they decide how large a rate cut to make at their coming meeting. Central bankers have signaled that they could cut rates by either a standard quarter point (25 basis points in market lingo) or a larger half point (50 basis points).
“Right now, I’m not in the camp of 25 or 50 — I need to see a couple more weeks of data,” Patrick Harker, the president of the Philadelphia Fed, said on CNBC this week.
Politics will be the elephant in the room.
Politicians care a lot about what the Fed does — especially in an election year. Nobody wants to inherit a recession. And incumbent presidents prefer low interest rates, which goose markets and the economy.
But the White House has no direct control over Fed policy. Presidents appoint the Fed’s seven-member board in Washington, including the Fed chair, but those officials must be confirmed by the Senate. And once they are in place, officials are insulated from politics and free to set policy as they see fit.
That does not prevent elected officials from talking about the central bank, though. Former President Donald J. Trump, the Republican candidate, has a history of commenting on Jackson Hole in particular.
When he was in office in 2019, Mr. Trump posted on social media immediately after Mr. Powell’s Jackson Hole speech, asking who was the “bigger enemy” — Mr. Powell or Xi Jinping, China’s leader.
And already this year, Mr. Trump has made a habit of talking about the Fed from the campaign trail, saying or implying that it would be political if it cut interest rates before the election, and at one point saying presidents should have a “say” in monetary policy (an assertion he later played down).
Central bankers say they ignore both political haranguing and elections when thinking about rates.
“They just don’t get dragged down into that muck,” said Julia Coronado, a former Fed economist and founder of MacroPolicy Perspectives, a research firm. Plus, a move in September would be unlikely to sway markets or the economy enough to be decisive.
“I don’t think presidential elections are won or lost on a rate cut, or a rate hike,” she added.
Jeanna Smialek covers the Federal Reserve and the economy for The Times from Washington. More about Jeanna Smialek
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