There will be no Wall Street economists in the audience when Janet Yellen addresses the Kansas City Fed’s annual Jackson Hole conference for the first time as chairwoman of the Federal Reserve.
Economists from investment banks have for years rubbed shoulders with policy makers at the conference and their expulsion, taking the event back to its roots as a wonky occasion for central bankers, reflects Fed sensitivity about any perception of privileged access for financiers.
Even though investors have come to expect market moving news from Jackson Hole – the theme of this year’s event is labour markets – the shift in the guest list towards policy makers highlights that the conference was never designed to communicate monetary policy.
The 2013 forum included Wall Street economists such as Martin Barnes of BCA Research and Jim O’Sullivan of High Frequency Economics and financial guests such as Phillipa Malmgren of Principalis Asset Management. But they are all absent this year.
“Some of this is an issue around the potential appearance problems of having people from major primary dealers at a conference sponsored by the Fed,” said one economist of a Wall Street bank, who was not invited this year even though he has previously attended. The financier said he did not want to be named because he did not “want to sound like a crybaby”.
Ethan Harris, chief economist of Bank of America, who is not attending this year, noted that there was a risk that officials could miss out on the different vantage point of the financial sector.
He said: “A good example of that was the 2008 Jackson Hole. The meeting occurred right in front of the worst financial crisis in modern history but the main topic of discussions among the attendees was the risk of higher inflation. That was certainly not the view of the financial sector economists at the time.”
Wall Street financiers are replaced this year by guests such as William Spriggs, chief economist of the AFL-CIO, the umbrella organisation for the US union movement.
“The primary audience for the Jackson Hole economic symposium has always been central bankers,” said Diane Raley, head of public affairs for the Kansas City Fed. “This year’s symposium focuses on labour markets and the audience composition is designed to be a complement to this important public policy discussion and debate.”
The political sensitivity of the conference for the Fed was highlighted by a group of young civil society protesters, working the hall outside the conference room, wearing green T-shirts emblazoned with the slogan “What Recovery?”
While the Jackson Hole event is the pride and joy of the Kansas City Fed, the Federal Reserve in Washington has sometimes been uncomfortable as the hoopla around the conference grows year after year.
Ben Bernanke, in his later years as Fed chairman, made sporadic efforts to play down the conference, giving a low key speech in 2011 and skipping it altogether in 2013.
Having chosen to attend, Ms Yellen knows that her speech will be scrutinised for policy signals. Minutes of the Fed’s July policy meeting show that it is making progress on plans to raise interest rates but has not made any decisions.
One point Ms Yellen may choose to emphasise again is that the Fed will raise interest rates earlier than planned if economic data keep coming in stronger than expected.
The central bank has been using steadily stronger words to try to send that message but financial markets have paid little attention, with the 10 year bond yield near its lowest level for a year at 2.41 per cent. That could mean Ms Yellen sounds more hawkish than markets expect.
Most of this year’s Jackson Hole guests are central bankers, from Brazil to Turkey to Latvia. One last-minute absentee was Ksenia Yudaeva, the first deputy governor of the Bank of Russia, perhaps reflecting tensions over Ukraine.
Mario Draghi, president of the European Central Bank, and Haruhiko Kuroda, governor of the Bank of Japan, are attending. They will both speak at the event.