Covid 19 is not tamed. To remind us, if ever there were the need, is also the surge in infections in Teton County, an award-winning tourist destination in Wyoming, starting from Jackson Hole Valley. The health emergency has had two consequences: yoga classes have been canceled for vacationers at the resort, which is located one step away from the southern entrance to Yellowstone park. Far more serious, the program of meetings of the annual economics symposium policy promoted by the Kansas City Fed, the event that for almost forty years has been the most eagerly awaited appointment to find out how the president of the most important central bank on the planet thinks. The "physical" appointments have been skipped, including the eagerly awaited speech by Jerome Powell, the president who, although present in the hotel, will speak via streaming to a virtual audience, while the cancellations of the lobbyists rained down, who, in droves, had booked themselves to participate in the meeting (1.500 dollars the conference fee) and thus establish contact with the Washington staff.
In short, due to Covid -19, the 39th edition of the meeting risks being "poor", forcibly deserted by the big names in big finance who had chosen it, like Mario Draghi in two memorable sorties (2014 and 2017), as the platform to launch once and for all the offensive against the policy of financial constraints in the name of supporting the feverish economies after the great crisis.
Other times. Today the Fed has already widely anticipated in the minutes published last week the path it intends to follow to exit, as gradually as possible, from the economic support policy which threatens to light the fuse of inflation. The Fed, analysts agree, will announce the start of tapering, that is, cutting interventions next month and then proceeding with the utmost caution from the end of the year, with the aim of archiving purchases by the middle of next year and then proceeding with a timid rate hike in 2023. Or in 2024 Not before, because the memory of the violent reaction of the markets in 2013, when the then president Ben Bernanke was forced to a hasty retreat, is still alive. Powell, who is playing for reconfirmation at the top next spring, will proceed with lead feet.
Put like this, a trip to Jackson Hole seems completely pointless this year, unless you love fishing as much as you do Paul Volcker, the mythical governor who defeated inflation at the cost of displeasing the presidents. In 1982, he was persuaded to participate in the symposium because he was attracted by the fame of the trout that splash in the waters of the Snake, the river that flows in the valley. But even for those who don't like angling or a run in Yellowstone in search of the Yogi Bear, Jackson Hole is still a key stop as it showcase of research and orientations of economic policy, not only monetary, prevailing within the Fed. Especially this year, in which the meetings were dedicated to the study of the "uneven economy", or rather the inequalities and the therapies necessary to remove them. In other words: once it is recognized that low rates and abundant money have not been sufficient to reduce inequality, what will be the means and objectives to be pursued in the coming years? How will the Fed deal with inflation stably above 2 percent?
Mind you, it is not a game that is played on the decimals of the rates, moreover today more than competitive compared to the rest of the planet, nailed down below zero. And Powell will be reminded by the protesters, at least 350, who in defiance of Covid promise to go up to the resort to ask for a precise commitment from the Fed on climate change and racial inequalities while the Republicans, Powell's party, receive the warning of "do not go beyond the limits established for the bank”.
Powell's speech, in reality, will only cover these problems, but he will have to do it anyway, if he wants to avoid ending targeted by more radical Democrats che are calling for a clear takeover of the field and are pressing for a central banker who is more sensitive to the green of the lawns than the color of the dollar. But to lend a hand to the lawyer who had the merit of not bowing to Trump (who was right about rates) there will be Janet Yellen who does not mind this Fed lying on the needs of the Treasury. And the real news is this: once the most important bankers, from Draghi to Yellen, have been lent to politics, the appeal of central banks has nevertheless declined.
