▲ Federal Reserve Chair Kevin Warsh
The Jackson Hole Economic Policy Symposium, bringing together central bank governors and economic experts from around the world, kicks off for a three-day run starting on the 27th local time in Jackson Hole, Wyoming, USA.
Organized by the Federal Reserve Bank of Kansas City, the meeting has historically had a significant impact on global financial markets, as remarks from the heads of major central banks, including the U.S. Federal Reserve (Fed), are interpreted as signals regarding future policy directions.
From South Korea, Bank of Korea Governor Rhee Chang-yong is attending.
All eyes at this year's conference are focused on the keynote speech by Federal Reserve Chair Kevin Warsh, scheduled for 8:00 AM local time on the 28th, which is 11:00 PM Korean time.
This marks Chair Warsh's debut at Jackson Hole since taking office in May, leading market assessments that the honeymoon period of his early tenure has ended and he now faces a full-fledged policy test.
Warsh has previously maintained the stance that forward guidance regarding future interest rate paths in communication with the market should be limited.
His rationale is that rather than presenting specific rate paths, the market should judge Fed policy based on economic indicators and financial market movements; however, some critics point out that this communication style has instead heightened market uncertainty.
Consequently, the primary point of interest in this speech is how Chair Warsh diagnoses the current high inflation rate.
With recent U.S. inflation rates still exceeding the Fed's 2% target, various factors stimulating inflation are piling up, such as rising energy prices driven by the U.S.-Iran war and a trade war with Canada.
Tension in the bond market has also escalated.
Driven by the widening U.S. fiscal deficit, increased Treasury supply, and the artificial intelligence (AI) investment boom, the yield on 30-year U.S. Treasuries recently surged to its highest level since 2007.
Additionally, U.S. Treasury Secretary Scott Bessent's decision to double the scale of Treasury buybacks adds another variable.
Markets are also watching closely to see how Chair Warsh evaluates the rise in long-term interest rates and how he views the impact of the Treasury's buybacks on financial market conditions.
Initially, it was projected that Warsh would focus his speech on structural economic changes and long-term policy tasks, such as productivity improvements driven by AI; however, as concerns over inflation and bond market instability grow, pressure has mounted for him to clearly articulate the immediate path and rationale for monetary policy.
University of Chicago Professor Anil Kashyap told The New York Times (NYT) that the honeymoon is over and the market expects Warsh to clearly lay out the rationale behind how the economy is functioning.
(Photo: AP, Yonhap News)
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