Draghi and Yellen to hog the spotlight at annual central bankers' retreat in Jackson Hole


ECB president Mario Draghi will be a star attraction at Jackson Hole (Source: Getty)

Some of the world’s most important central bankers will gather this week for an annual meeting in Jackson Hole, with unwinding the quantitative easing bond-buying programmes expected to be high up the agenda.

Federal Reserve chair Janet Yellen and European Central Bank (ECB) president Mario Draghi will both address counterparts, academics, and other monetary policy experts at the symposium, held in the picturesque surroundings of a Wyoming national park.

Bank of England deputy governor Ben Broadbent will also attend the gathering, although there are currently no plans for any Bank officials to speak publicly. Governor Mark Carney will not be in attendance.

Read more: Federal Reserve minutes: Splits on "concern" over inflation weakness

The discussions, held every year since 1978 by the Federal Reserve Bank of Kansas City, often feature vital interventions in global markets as central bankers wrestle with some of the biggest issues in economic policymaking.

Draghi is likely to be the star attraction for investors this year: three years after he first announced a quantitative easing programme, sending European bond yields plummeting, investors are now waiting with bated breath for signs the central bank will taper its monthly bond purchases. The ECB is currently buying around €60bn in bonds every month, but the programme is set to run out in December.

Most economists do not expect Draghi to make a policy announcement this week, with his theme understood to be that of the whole conference: "Fostering a Dynamic Global Economy". However, the symposium will provide an opportunity to send a signal to markets on the prospects for a continued pick-up in growth and inflation in Europe.

Read more: That'll do it: Pound climbs as ECB minutes show concern over euro strength

Any hawkish signal on either monetary policy or growth would likely prove a further boon to the euro, although last week concerns among ECB officials over euro strength dragged on the single currency. Draghi is due to speak at 8pm UK time on Friday evening, after European markets have closed.

Meanwhile, economists are not expecting Yellen to give much more clarity on the Fed's own quantitative easing assets at her speech, expected at 3pm UK time on Friday.

The Fed balance sheet currently stands at $4.5 trillion in bonds mostly bought since the global financial crisis a decade ago. US policymakers are currently deciding when to stop reinvesting the proceeds of matured bonds, a step which would allow the balance sheet to shrink gradually.

Any hints on the Fed’s next rate hike would also be seized on by investors. Concern has risen that the pace of interest rate hikes may be slower than the market expects after recent weakness in inflation. Signs of a dovish outlook on inflation could weigh on the dollar.

Read more: Dollar hits 13-month low as pound hits highest level since September