Fed Conference Agenda Points to Policy Challenges in ‘Uneven Economy’

Fed Conference Agenda Points to Policy Challenges in ‘Uneven Economy’

Policy makers are set to gather virtually after the Delta variant scrapped plans for an in-person gathering in Jackson Hole

The Kansas City Federal Reserve Bank last week scrapped plans to gather at the foot of the Tetons outside Jackson Hole, Wyo., for its annual economic policy conference amid rising concerns about health threats posed by the Delta variant—a reminder of how the Covid-19 pandemic continues to pose considerable uncertainty for the U.S. economy despite the broad availability of highly effective vaccines.

Instead, Fed policy makers and outside academics are set to gather online Friday for the second straight virtual symposium. The theme of this year’s event is “Macroeconomic Policy in an Uneven Economy.”

The event kicks off at 10 a.m. Eastern time with remarks on the economic outlook by Fed Chairman Jerome Powell. The central bank is in the middle of a heated debate over how and when to begin dialing back its extraordinary stimulus, including $120 billion in monthly asset purchases.

Investors are looking for clues from Mr. Powell over whether the Delta variant has altered plans to begin scaling back, or tapering, those purchases in coming months.

When Mr. Powell addressed the event virtually last year, he unveiled a new strategy in which the Fed would keep rates lower for longer to prevent consumers’ and businesses’ expectations of inflation from slipping too low. Now, the Fed faces a different problem: Inflation surged this spring and summer due to disrupted supply chains, temporary shortages and a rebound in travel.

The Delta variant threatens to delay a rebound in travel and leisure spending, and could make it harder for Fed officials to get more clarity on underlying labor-market and broader economic dynamics, if the virus makes workers and consumers more cautious.

Mr. Powell’s remarks on Friday will be streamed online. The rest of the conference is open only to invited guests.

The conference includes discussions of four different academic papers. Veronica Guerrieri of the University of Chicago will present on “Monetary Policy and Uneven Shocks,” followed by Pierre-Olivier Gourinchas of the University of California, Berkeley, who will present on “Fiscal Policy and Uneven Shocks.” Their presentations will be followed by a panel that includes Gita Gopinath, the chief economist of the International Monetary Fund, and Alan Blinder, a former Fed vice chairman.

The conference’s afternoon session includes remarks from Donald Kohn, a former Fed vice chairman, and presentations of the final two papers. Ayşegül Şahin of the University of Texas will present research on the Covid shock and the labor market, and Amir Sufi of the University of Chicago presents research on low interest rates.

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