A few chiefs missing from Jackson Hole

Despite the absence of Ben Bernanke, Mario Draghi and Mark Carney, plenty of clues on their thinking may be available at the central bankers' meeting this weekend.


Jackson Hole, the nearest thing on the central banking calendar to Davos, is upon us again, with some of the world’s most senior monetary officials set to head out to the upmarket Wyoming resort over the next few days.

Unlike the annual bash in the Swiss Alps, however, Jackson Hole, which kicks off on Thursday evening and closes on Saturday night, is usually a bit more than a talking shop. Of late, it has been the venue of choice for Fed chair Ben Bernanke to offer clues on where policy is heading.

But, while tapering looks like it is almost upon us, those hoping for more detail on the pace at which the US central bank will slow its asset purchases will not get it from Bernanke this weekend.

He won’t be there this year. And, while vice-chair Janet Yellen will be (unlike Lawrence Summers – her supposed rival to replace Bernanke next year), she will not be making a speech. Mario Draghi and Mark Carney are also staying home — both have sent deputies instead.

However, the absence of the heads of three of the most important central banks does not necessarily mean we won’t get any clues into their thinking on monetary policy.

For a steer on the future direction of policy, it is worth keeping a close eye on the policy papers presented at the conference.

Last year, Michael Woodford, an influential US monetary economist, put forth the case for central banks to link their forward guidance on interest rates to definite criteria for future policy decisions.

A few months later, in December 2012, the Fed said it would leave interest rates just above zero until unemployment fell below 6.5 per cent. Earlier this month, the Bank of England followed suit.

Those looking for clues on the ECB’s thinking would do well to keep an eye on what Frank Smets, director general for research at the central bank and the only ECB official who will set foot on the conference podium, says. On Friday morning local time, he will follow up on a talk by Agustin Carstens, Mexican central bank governor, about monetary policy options and tools when rates are at zero.

While the crucial three are missing, plenty of central bank heads are still attending.

Notable among them is Haruhiko Kuroda, Bank of Japan governor. On Wednesday, Kuroda hinted that the BoJ, not content with pledging to double the base money supply in 18 months, was open to further easing. It will be interesting to see if his Saturday speech spells out the measures the BoJ would take should plans to raise taxes weigh on growth in the world’s third-largest economy.

Also going are the governors of the Swiss and Brazilian central banks, along with IMF managing director Christine Lagarde.

Copyright the Financial Times 2013. 

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