This week, central bankers from around the globe are gathering in Jackson Hole, Wyoming, for the highly anticipated annual symposium organized by the Kansas City Federal Reserve, held at Grand Teton National Park.

The symposium captures the attention of investors worldwide, as the comments made by key monetary policymakers can significantly impact market movements.

Here’s a preview of what to expect and why it’s important to watch.

Doves and Hawks

In recent years, the symposium has welcomed around 120 attendees, featuring most of the Federal Reserve’s 19 policymakers alongside numerous central bankers from Europe, Asia, Africa, the Americas, and beyond.

Additionally, the event includes many economists and officials from academia, government entities, international organizations, and various financial institutions, as well as a group of journalists.

Attendee details and the agenda for the event are kept under wraps until Thursday evening.

Dining With Bears

The symposium kicks off on Thursday with a dinner illuminated by antler chandeliers at the historic Jackson Lake Lodge. As guests enter the private dining area, they pass by a taxidermy grizzly bear in the lodge’s lounge, which offers stunning views of the rugged Teton mountains.

The event runs until midday on Saturday, focused on discussions surrounding a series of academic papers. This year’s theme is “reassessing the effectiveness and transmission of monetary policy.”

While the atmosphere may be intellectually charged, participants often take time to hike around a mountain lake, and some even don cowboy boots and western attire.

Highlights From Jackson

The spotlight falls on Federal Reserve Chair Jerome Powell’s address on Friday morning.

Investors are eager to hear if he believes inflation has decreased enough to consider an interest rate reduction next month, and if his concerns regarding a rising unemployment rate could lead to a significant cut.

While most analysts anticipate a lesser cut, Deutsche Bank economists point out that “it will be challenging for Powell to commit to a specific path at Jackson Hole.” He has emphasized that his decisions will rely on data, especially with important economic indicators forthcoming before the Fed’s meeting on September 17-18.

Market Reactions

Big fluctuations in the stock market during the Jackson Hole symposium are rare, but they can occur.

For instance, in 2022, the S&P 500 index saw a 3.4% drop when Powell indicated that curbing the highest inflation in decades might bring hardships to households and businesses, which has largely not materialized despite a substantial drop in inflation since then.

In 2019, the S&P 500 fell 2.6% on the day of Powell’s speech, influenced more by escalating U.S.-China trade tensions than by his statements.

Former Fed Chair Ben Bernanke’s speeches at Jackson Hole previously prompted two rallies in the stock market. In 2009, he incorrectly predicted a quick return to global growth post-Global Financial Crisis, leading to a 1.8% rise in the S&P 500, and in 2010, he promised more bond buying would occur if necessary, resulting in a 1.6% increase in the index the following year.

Even when market movements are minimal, Powell’s speeches can still make a significant impact.

In 2020, Powell indicated a change in the Fed’s approach, stating they would no longer raise interest rates merely due to a strong labor market, marking a shift from their previous proactive stance against inflation. This announcement saw the S&P 500 increase by 0.2% that day.

A History of the Symposium

Since 1978, the Kansas City Fed has hosted this annual symposium. It initially centered on agricultural topics but evolved over the years to attract more prominent figures.

In 1982, the meeting was relocated to its current venue in order to entice then-Fed Chair Paul Volcker, an avid fly fisherman, to participate.

This strategy worked, as Volcker attended the opening dinner in his fishing attire.

Alan Greenspan, who served as Fed Chair from 1987 to early 2006, initiated the now-traditional keynote address by the leader of the world’s most significant central bank in 1991.