It’s likely that investors will have been watching both events closely for indications of the future direction of the global economy as well as possible developments in major topics such as interest rates, Brexit and the US-China trade war.
The Jackson Hole Symposium is named after the location in Wyoming where the meeting is hosted. Attendees included executive board members of the European Central Bank (ECB) and the central bank heads of several countries, including Canada, Australia, New Zealand, Hong Kong, Argentina, Norway, Denmark, Finland, the Netherlands and South Africa. ECB President Mario Draghi and Bank of Japan Governor Haruhiko Kuroda both elected to skip the event after occasionally attending the conference in the past.
The annual meeting to discuss economic policy was tipped to provide an indication of whether the US Federal Reserve will capitulate to the President or continue on its current path. In general, the symposium is not considered a political event, but a chance to discuss monetary policy against the backdrop of both the domestic and global economy. However, political issues including the US-China trade war, Brexit and the recent protests in Hong Kong were included in the discussion because of their impact on economic performance. While many may have hoped for a clearer indication on which way interest rates are likely to move, if at all, in general the meeting was designed for the bigger picture, rather than major announcements.
A morning that saw China announce additional tariffs on $75 billion of American goods set a tense mood among investors, with all eyes firmly on Chairman Jerome Powell, waiting to see if he had revised his approach to fiscal policy in light of the latest forecasts.
His speech gave little away, with Powell acknowledging that “trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States”, however refusing to elaborate on the Fed’s plans going forward or commit to another rate cut.
Outgoing Bank of England Governor Mark Carney also spoke at the event, posing the idea of a private/state-run digital currency that could replace the USD as the global reserve currency. While deemed radical to some, this line of thinking is in keeping with Carney’s recent dialogue and is by his own admission still years away from delivery.
Other speakers at the event highlighted the tenuous role of the dollar and the lessening likelihood of interest rates increasing - the key message being that things were about to change for global economics and that the methods and measures of the past cannot be relied upon in the same way going forward.
Meanwhile in Biarritz, the 45th G7 Summit took place and saw Prime Minister Boris Johnson meet many world leaders for the first time as PM, including US President Trump. Johnson spoke briefly on Brexit at the event, expressing his satisfaction that the other European leaders appear willing to hear an alternative solution to the Irish backstop. This potential bypass of a ‘no deal’ Brexit was good news for the pound, continuing last week’s short term recovery.
The key topics of the summit were the US-China trade war, emergency aid for the Amazon wildfires and the escalating relations with Iran, while the meeting of Johnson and Trump got the ball rolling on post-Brexit trade talks between the UK and the US.
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