Janet Yellen takes centre stage at the Jackson Hole central banking symposium - investors waiting nervously for any steer on future U.S. rate hikes. But as Kirsty Basset reports, the Fed chief also faces a more fundamental question: is conventional monetary policy running out of road?
Jackson Hole, Wyoming. The world's most influential central bankers will soon gather at this mountain resort for their annual meeting on monetary policy. All eyes and ears will be on Fed reserve chair Janet Yellen's opening address, and any signal it may send about the timing of a U.S. interest rate hike. (SOUNDBITE)(English) RABOBANK SENIOR FX STRATEGIST JANE FOLEY SAYING: "We do need some direction from the Fed. We've certainly had some hawkish comments from various Fed officials suggesting perhaps that there is enough inflation and enough employment growth in the U.S. for them to move forward. But the market remains unconvinced and I think we do need to see not only a continued improvement of U.S. data but also something hawkish from Yellen to really tell us if the Fed are going to move ahead and hike rates this year." Policymakers from the central banks of Europe and Japan will also be there. No one's expecting them to even contemplate tighter monetary policy - prolonged economic weakness has all but ruled it out. Instead, they may find themselves debating whether years of negative rates have made a difference. (SOUNDBITE)(English) RABOBANK SENIOR FX STRATEGIST JANE FOLEY SAYING: "There are accusations that despite the use of negative rates there are no signs that consumers are spending more. That in fact rather than spend their savings they are indeed potentially saving more so they end up with the same pension pot at the end of 20-30 years." A gloomy CPI reading out of Japan released early on Friday added to evidence that the Bank of Japan has reason to increase its stimulus next month, as the economy slips back toward deflation.