Central bankers gather next week for the Kansas City Fed’s annual policy retreat in Jackson Hole, Wyoming. The discussions are typically based around a series of academic papers presented at the three-day conference, with Powell’s remarks a key highlight. This year’s gathering gives officials a timely chance to discuss the implications of a weakening world economy.
“They have to be thinking about how may a global recession impact the U.S. economy and do lower negative yields elsewhere take our comparable U.S. yields down with it,’’ said Sam Bullard, senior economist with Wells Fargo & Co.
China has reported the weakest growth in industrial output since 2002, while Germany’s economy shrank as exports slumped. An upcoming risk is Brexit as U.K. Prime Minister Boris Johnson has pledged to take Britain out of the European Union on Oct. 31.
Trade battles remain a wild card for the Fed and have contributed to market swings this week. China called additional, looming U.S. tariffs a violation of accords reached by President Donald Trump and his Chinese counterpart Xi Jinping, vowing retaliation. Trump announced the tariffs set for Sept. 1 and Dec. 15.
“Based on what Jay Powell said in July, they’re not necessarily looking at current data as much as expectations for future data,’’ said Michelle Meyer, head of U.S. economics at Bank of America Corp. “In the past few weeks we’ve definitely seen more risk to the global outlook with a slowdown in global growth and trade concerns.’’
This article was provided by Bloomberg News.