JACKSON HOLE ECONOMIC SYMPOSIUM
The Jackson Hole Symposium is an event organized by the Federal Reserve Bank of Kansas City every August since 1978. The event is hosted in Wyoming, USA, and gathers the most prominent and influential central bank governors, economists, academics, government officials, and business leaders from around the world. The symposium attracts attention as it usually features speeches, comments, and decisions that have a near-term impact on financial markets.
The 2025 economic symposium is titled "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy" and will be held from August 21 to August 23. Investors will be closely watching Fed Chair Jerome Powell’s speech on Friday (August 22).
- WHO WILL BE THERE
The symposium will host around 120 attendees, including central bank governors such as US Federal Reserve Chairman Jerome Powell, Bank of England Governor Andrew Bailey, and European Central Bank (ECB) President Christine Lagarde. In the past, it has also drawn former ECB President Mario Draghi and former Fed Chairs Ben Bernanke and Janet Yellen. Other Fed governors will also attend, alongside business leaders, heads of commercial banks, and US government officials.
- IMPORTANCE: FEDERAL RESERVE INTEREST RATE CUT POLICY AND JEROME POWELL SPEECH
The 2025 economic symposium will focus on the labor market, under the theme "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy." The US labor market remains under pressure, with unemployment at 4.2%, nearing the Fed’s 4.5% target rate for 2025. July Nonfarm Payrolls (NFP) jobs (73,000) missed forecasts of 106,000, while June was sharply revised down to 14,000 from 147,000.
Weak labor data has reinforced expectations for a September rate cut of at least 25 basis points, which could lower the Fed interest rate to 4.25% from 4.5%, with another cut anticipated by year-end. Fed Chair Jerome Powell’s speech on Friday (August 22) at 15:00 GMT+1 will be closely watched for clarity on the policy outlook.
• LAST YEAR: MOST IMPORTANT ANNOUNCEMENTS THAT MOVED THE MARKETS
Usually, investors closely watch this symposium because they receive signals from attendees about potential future financial conditions. They pay particular attention to the Fed Chair’s speech, as they head the most important monetary institution in the world, and their hints can have a strong impact on financial market decisions. Since 2018, Fed Chair Jerome Powell has always delivered a speech, almost always signaling what the near-term interest rate path could look like. Most recently, last year, Fed Chair Powell spoke on “Reassessing the Effectiveness and Transmission of Monetary Policy.” However, his speech included strong hints of potential interest rate cuts in September 2024, as he emphasized the downward path of US inflation. He noted that US inflation had significantly declined, signaling potential rate cuts from then current 5.50%. Eventually, the US Federal Reserve began its latest interest rate cut cycle in September of 2024, cutting rates from 5.50% to 5.00%. The decision was followed by two additional 25-basis-point rate cuts in November and December 2024, lowering rates to the current 4.5%.
- FINANCIAL MARKET REACTION
Interest rate cut cycles, which continuously lower interest rates until the cycle is complete, tend to encourage investors to seek returns elsewhere, potentially leading to withdrawals from bank deposits as near-term rates fall. This makes saving less attractive and puts downward pressure on the US dollar due to lower demand. When the US dollar weakens, commodities priced in dollars become more affordable, increasing demand and putting upward pressure on commodities such as gold and silver.
Furthermore, a lower interest rate environment reduces companies’ existing borrowing costs and makes future borrowing more affordable. Investors anticipate increased business activity, which could lead to higher sales and earnings. From this perspective, US stock prices generally experience upward pressure when interest rates decline.
Conclusion
The US Federal Reserve officially began its interest rate cut cycle on September 18, 2024, shortly after the Jackson Hole Economic Symposium in August. Since then, the Fed has lowered rates from 5.50% to the current 4.50%. Markets have responded positively to the monetary policy and expectations for further cuts, with the USA100 hitting fresh all-time highs and rising around 21%, gold up around 30%, and the EUR/USD gaining roughly 5%, indicating a weaker US dollar.