Jackson Hole D-1: Will 'Tapering' Be Mentioned?.. Hawks Pressure Powell

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed) [Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] On the 26th (local time), one day before the Jackson Hole meeting in the United States, the financial market is holding its breath, waiting to see what remarks Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), will make at this meeting.

As the U.S. economic recovery continues and inflation rises, the prevailing view was that the Fed would announce its tapering plan either at the Jackson Hole meeting or the September Federal Open Market Committee (FOMC). However, with the recent spread of the COVID-19 Delta variant, expectations have grown that the Fed will not disclose specific future monetary policy plans at this Jackson Hole meeting.

Meanwhile, on this day, hawkish figures such as James Bullard, President of the St. Louis Fed, Esther George, President of the Kansas City Fed, and Robert Kaplan, President of the Dallas Fed, collectively pressured Chairman Powell to start tapering (reducing asset purchases).

President Bullard appeared on CNBC and said, "At this point, asset purchases are not necessary." He reiterated his previous stance that the Fed should begin tapering soon and end quantitative easing by early next year.

President Kaplan also stated that tapering should be announced at the September FOMC and started immediately after the September FOMC or in October, to be completed in about eight months. Kaplan emphasized that the Delta variant would not have a significant impact on the economy. He said, "What businesspeople have been saying recently is that although COVID-19 cases are increasing, they are coping better than during previous surges, and the shock from the spread is less severe."

President George said, "Inflation is rising and job growth is expected to continue," adding, "The opportunity to start tapering has come." He added, "It is better to start tapering sooner rather than later."

They also argued that tapering should be used to stabilize inflation quickly. High inflation hits low-income groups harder, which exacerbates economic inequality.

President Bullard expressed concern about rising housing prices. He pointed out, "Purchases of mortgage-backed securities (MBS) under quantitative easing have lowered mortgage rates, fueling asset price increases," and added, "Quantitative easing is causing more harm than good to the economy."

The Jackson Hole meeting is an annual economic event hosted by the Kansas City Fed, where central bank governors and finance ministers from major countries gather. The Fed has historically disclosed important monetary policy information at the Jackson Hole meeting.

However, Bloomberg News assessed that this year, due to the spread of the Delta variant, it will be difficult for the Fed to provide specific explanations about future monetary policy, and the Jackson Hole meeting could increase uncertainty regarding the Fed's tapering.

Chairman Powell is scheduled to hold a press conference at 10 a.m. on the 27th. Bloomberg expects that Powell will refrain from mentioning tapering explicitly and will convey the stance that tapering will begin appropriately within the year without specifying a concrete timeline.

This content was produced with the assistance of AI translation services.