Jackson Hole summit has market holding its breath, and China has financial war with US on its mind
- Before the widely watched Jackson Hole summit of central bankers in the US, China’s economic experts held their own meeting in Beijing, with an abundance of risk warnings
- ‘Fast expanding’ global financial shock waves from the US Fed’s aggressive interest rate hikes force China’s central bank to walk a tightrope in trying to curb financial risks
As the market sniffs for any clues about what sort of rate decisions the US Federal Reserve is favouring at the Jackson Hole summit of central bankers, Beijing’s policymakers and advisers are reviewing their own playbook, with geopolitical tensions and financial war on their minds.
Some of the more circulated hawkish views have already made it clear – there’s a massive divergence in the economy-management practices of China and the United States. St. Louis Federal Reserve president James Bullard has stated that interest rates will continue to rise as inflation continues, and that officials should lift their policy benchmark interest rate to a range of between 3.75 and 4 per cent by year’s end.
So, while the Jackson Hole Economic Symposium – one of the longest-held central banking conferences in the world – is being watched closely by investors interested in monetary policy, China’s economic experts have also been meeting and discussing what could be long-term ramifications of the decisions that emerge from the summit in the US state of Wyoming.
At a closed-door session in Beijing last week – according to a transcript released this week – there were growing worries of a potential global recession, financial shocks and worsening China-US relations.
“Global financial risks fuelled by the United States are fast expanding,” Dai Xianglong, who was at the helm of the People’s Bank of China from 1995-2002, warned at the gathering.