Jackson Hole: central banks are entering a new era of contradictory challenges

The highly anticipated annual gathering of central bankers in Jackson Hole this week takes place in a context marked by different. Meanwhile, unique challenges depending on the regions. Consequently,

While previous editions of the symposium focused on the common challenges with which central banks faced. Furthermore, such as quantitative easing (quantitative EASING) and the economic support linked to the pandemic, this year’s meeting takes place in a very different context. Therefore, Central banks are now found to sail in a new era. Therefore, where monetary policies will play an even more crucial role in the coming months.

This dynamic is particularly obvious for large central banks such as the Federal Reserve (Fed). In addition, the European Central Bank (ECB), the Bank of England (BOE), the Swiss National Bank (BNS) and the Bank of jackson hole: central banks entering Japan (BOJ). Moreover, Each institution is faced with distinct economic pressures, making their tasks particularly complex. Meanwhile, Among them. the ECB seems to be in the most favorable position, having made significant progress towards all its objectives, including the achievement of the neutral rate, as recognized by President Christine Lagarde. This contrasts with other central banks, which remain hesitant to discuss their neutral rate.

The ECB stressed that it had a limited need to act more. unless the economy of the euro zone deteriorated more than expected. If economic growth reaches 1% next year. that inflation stabilizes around 2% (currently low) and the tariff situation does not worsen, it is unlikely that the ECB will take political measures. However, if the conditions deteriorate, the ECB could consider descending temporarily below the neutral rate to preserve its political flexibility. This scenario could materialize next year if economic growth in countries like jackson hole: central banks entering Germany and France does not meet expectations. The ECB will also closely monitor Fed’s actions because the rate of rate reductions in the United States could. influence its own political decisions.

The Fed will also have to manage the impact of customs tariffs. which are currently absorbed by American importers but should start to affect consumers in early 2026.

Meanwhile, the Fed faces a particularly difficult road. Political pressures are increasing. with the White House pleading for rate drops and the possibility of the appointment of a new president of the Fed more aligned on the economic agenda of President Trump. The FED will also have to manage the impact of customs tariffs. which are currently absorbed by American importers but should start to affect consumers in early 2026. Although data on July inflation have not yet reflected the pressures linked to prices. the outbreak of wholesale prices jackson hole: central banks entering in the United States last week indicates that the effects are starting to repercuss the economy. With signs of overheating in the American economy, we plan that inflation in the United States could reach 3.5% by next year. Consequently. the Fed should advance with caution, by implementing two rate drops this year from September, followed by three additional drops in 2026.

BNS is faced with its own challenges. while 39% American prices on most goods should already have an impact on the Swiss economy, which could lead to a new growth contraction next year and accentuate employment pressure. At the same time. inflation in Switzerland has remained close to zero this year, but recent figures surprised upwards, encouraging the Central Bank to carefully examine its monetary policy decisions. With a zero key rate since June. the BNS has a limited room for maneuver and could consider a drop of 0.25% jackson hole: central banks entering in negative territory by the end of the year or at the start of next year.

The Boj is faced with the delicate task of preventing a liquidation of the Carry Trade. a challenge that requires cautious management. However, in our opinion, it is probably the BOE which faces the greatest challenge among the central banks mentioned. The BOE is deeply concerned about the fragility of the fundamental dynamics of the British market. On the one hand. Governor Andrew Bailey and his team fear that not reducing rates fairly quickly can slow down economic growth; On the other, they remain vigilant in the face of inflationary pressures, because inflation in the United Kingdom is far from mastered.

The varied challenges that each institution is confronted illustrate the complexity of the current global economic landscape. Perhaps more than ever this year. decisions made in the coming months will be decisive to jackson hole: central banks entering shape the trajectory of respective economies.