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Published On: Tue, Aug 19th, 2014

Jackson Hole meeting this week expected to yield clues on monetary policy outlook

At the Jackson Hole meeting, central bankers and distinguished economists will discuss labor market developments and the near-term path of monetary policy.

At the Jackson Hole meeting, central bankers and distinguished economists will discuss labor market developments and the near-term path of monetary policy.

The annual gathering of top central bankers and eminent economists to be held this week (21-23 August) in Jackson Hole, Wyoming is a keenly awaited event. Yet there are no expectations for milestone speeches like the one Fed chairman Ben Bernanke delivered 2 years ago, laying the groundwork for the unprecedented $85 billion of stimulus in the US.

The agenda of the meeting will include exhaustive discussions of labor markets in the major world economies, and perhaps clues will be provided on the path of monetary policy in the near future.

Janet Yellen is to attract the attention, as on Friday she steps into the meeting as a Fed Chair for the first time.She is not expected to stress on monetary policy, since the main theme is going to be labor market dynamics, a topic that Janet Yellen has mastered and loves discussing.

Other key speakers at the meeting include: the BOJ Governor, Haruhiko Kuroda; Brazil’s Central Bank Governor, Alexandre Antonio Tombini; and Ben Broadbent, Deputy Governor of the Bank of England.

Minutes from the last FED policy meeting, coming out on Wednesday, will give clues on Fed’s plans for funds rate control once it starts tightening policy.

In the BoE minutes, signs of dissent within the Monetary Policy Committee will be looked for, as last week the bank seemed to abandon the prospect of hiking the rate this year. If no dissenters are present, predictions on a November rate increase will be invalidated.

The debate on the Fed monetary policy will be intensified by the US inflation figures, as price pressures seem to be augmenting with the recovery of the US economy. And still, economists in general expect no major surprises arising from the July meeting. Inflation data would probably challenge policymakers toward the year end.

Stagnation in the second quarter in Europe was seen with the release of key economic data last week. PMI figures coming out this week will shed some light on the state of the euro zone economies last month. Business activity is expected to benefit from a weaker euro and improving credit conditions, but if the PMI numbers are disappointing, that may add to the pressure on the ECB to take action.

The exacerbating conflict in Ukraine caused major government bond yields to plummet to the lowest in over a year on Friday. This week the market is expected to remain volatile.

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