THE JACKSON HOLE SCENE — This week marks the Fed’s annual conference in Jackson Hole, Wyo., a gathering of central bankers, influential policymakers and top academics from across the globe. It’s as much a retreat as it is a symposium. Members of the Fed’s rate-setting committee meet roughly every six weeks to discuss the outlook. But here against a stunning mountainous backdrop, they can not only dig into deeper questions (how does our policy affect innovation? Is globalization receding or merely shifting?) they spend time chatting and getting to know each other better as people. That’s no small thing: by its design, the central bank has officials stationed throughout the country, so they often communicate from afar. And many also use it for some quality time with family, bringing spouses and even kids. POLITICO’s Victoria Guida is there, in the shadow of the Tetons, spending time with some of the world’s most powerful policymakers. She kindly agreed to speak with Nightly about her experience. The historic Jackson Lake Lodge, where the conference is being held, is known for its breathtaking scenery. Yet I have an image in my head of humorless, pasty-faced central bankers squirreled away in big, windowless conference rooms arguing about monetary policy. Can you give us a more accurate picture of the scene? Victoria Guida: Well, that’s not entirely inaccurate, although I wouldn’t call them humorless. Whether their jokes are funny is another question. Let’s just say they’ve gotten a lot of mileage out of “hiking” puns during their inflation fight. The meat of the gathering does happen in a conference room where they discuss monetary policy, but the room has windows. The conference also ends early in the afternoon because attendees want to leave in plenty of time to go on, well, hikes. There are multiple restaurants at the Lodge for people to fraternize over huckleberry-flavored drinks and a bar that stays open til midnight. There’s also always a night that includes dancing, like the Electric Slide. And, no, I’m not making that up. In his speech today, Federal Reserve Chair Jerome Powell made reference to “global factors” that influence food and energy prices and can really distort the inflation picture because of their unpredictability. Do other geopolitical topics — like Russia’s invasion of Ukraine, or China’s sudden slowdown, or climate change — come up in their more informal conversations? VG: Attendees of the conference are ultimately just as interested in these kinds of things as everyone else. European Central Bank President Christine Lagarde spoke today, and Bank of Japan leader Kazuo Ueda is on a panel Saturday, and even the most connected were eager to hear what these powerful people were going to say. Peterson Institute head Adam Posen, one of the invitees, told Nightly that direct economic spillovers from the slowdown in China to the U.S. likely won’t be large, but it could lead to disruptions to distinct and important sectors like rare earths or semiconductors. It could also have implications for global security. And that’s exactly the kind of thing central bankers are also watching and talking about. As for climate change, Lagarde mentioned how it was “triggering profound transformations in global energy markets,” something that is relevant to central banks for both economic and regulatory reasons, and here in the U.S. the deathly wildfire in Hawaii offered a stark and recent human backdrop to that conversation. Speaking of informal conversations — what keeps these folks up at night? VG: It’s pretty clear that what keeps Fed officials up at night is inflation. There’s a lot of chatter around where monetary policy might go once price spikes have been more thoroughly tamed, but the lurking concern is that things don’t end that neatly. On that front, there are still questions about whether there might be further pain in the financial sector after multiple regional banks failed earlier this year, though officials largely seem to want to handle those things through regulation rather than having to be more timid with rate hikes, if they feel they need to do more. Based on what you’re hearing there, how worried should we be about the state of the American economy? VG: I wrote this morning about how there are fundamental questions on how housing will play out for prices going forward, which is really just an example of how things could go quite well from here on — or the outlook could be about to take a nosedive. No one really knows, including Fed officials, although on the margins they’ve gotten more hopeful that the U.S. might be able to avoid recession. Lightning round question: What’s the quickest way to end a conversation with a central banker at the Jackson Lake Lodge bar? VG: I tried to get Chair Powell, who was passing through the lobby, to provide wry observational humor for inclusion in this newsletter and he quickly declined, so I guess that. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s guest at vguida@politico.com or on Twitter at @vtg2. PROGRAMMING NOTE: Nightly will not be publishing from Aug. 28 through Sept. 4. We’ll be back to our normal schedule on Tuesday, Sept. 5.
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