The traditional central bankers’ symposium begins tomorrow. The Fed Chairman’s speech is eagerly awaited.
Jackson Hole’s traditional central bankers’ symposium kicks off Thursday. Since the 2007-2009 financial crisis, successive Fed presidents have often taken advantage of this forum to announce changes in their monetary policy or to review their economic outlook. This year because of the pandemic, which is still galloping in the United States, this great mass which is usually held in Wyoming will be done mainly by teleconference.
This meeting remains however eagerly awaited. Investors will know whether they will be able to count on the unlimited support of the world’s major central banks for a long time to come, and in particular the powerful American Fed.
Boosted by the Fed’s asset purchases, stocks have recouped all of their pandemic losses and are trading at record highs, while bond yields are at historic lows.
The Fed, like most central banks, is targeting 2% inflation but has failed to meet that target for most of the past decade. With interest rates close to zero, the central bank has little room for maneuver to stimulate the economy.
Investors need clarity
For Mirabaud specialists, investors need clarity after the ambiguous speech of the US Federal Reserve (Fed) and the recent lack of communication from the European Central Bank (ECB). At the last Fed meeting Jerome Powell left the door open for further monetary interventions. “However by the time the Fed Minutes were released, the tone had changed somewhat, and Fed members no longer seemed as inclined to initiate further quantitative easing, control the yield curve or even initiate a twist operation. »Notes Mirabaud.
For these specialists, “a clarification from the head of the American monetary institution is therefore necessary”. “To this we can add that investors’ expectations of rising inflation are becoming more and more important while the yields on government bonds seem to tell us the opposite …” According to them, “a policy framework More flexible monetary policy in the face of higher inflation would be a way of signaling the Fed’s determination to revive growth after the current recession ”.
While waiting for gold, traditional protection against inflation and the fall of the American dollar, does not cease climbing. Since the start of the year, the price of the precious metal has appreciated by nearly 30%, while the dollar is at its lowest for two years.
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