Inflation Trumps Markets Rout at Jackson Hole Economic Symposium

As Federal Reserve officials and central bankers from around the world gather for an annual economic symposium in Jackson Hole, Wyo., inflation will be top of mind. ‘Because Chair Janet Yellen is not attending, the focus of Jackson Hole will shift to inflation,’ said Michael Hanson, senior economist at Bank of America (BAC) Merrill Lynch. ‘Vice Chair Stanley Fischer will be speaking about inflation on Saturday.’ The Federal Reserve has repeatedly said it will be ‘appropriate’ to raise interest rates once the central bank is reasonably confident that inflation will move back towards its 2 percent target. But that hasn’t happened. The Fed’s preferred inflation gauge, the personal consumption expenditure price index on a core basis, stripping out food and energy, rose 1.3 percent over the past year, as of June. July’s data will be released Friday by the Bureau of Economic Analysis. The other inflation gauge, the core consumer price index, rose 1.8 percent over the past year. ‘The Fed has typically dismissed low inflation as a combination of transitory factors that will fade, so if Fischer sticks to that script and as long as the volatility in the markets fades over the next three weeks, which is plausible, the data is strong enough for the Fed to hike,’ Hanson added, saying he’s still expecting a September rate hike. TheStreet’s Scott Gamm reports from New York.