LARRY SUMMERS is right; this year’s Fed symposium in Jackson Hole was triply disappointing. In the weeks before the gathering, members of the Federal Open Market Committee (FOMC) publicly discussed their worries that the current monetary framework might leave the Fed unable to deal adequately with future slowdowns. They got our hopes up: enough that we published a leader giving the Fed some suggestions for new approaches. But as Mr Summers says, the Fed let us all down. In their public remarks, at least, the FOMC members present expressed little concern about problems with the Fed’s toolkit or weaknesses with the current 2% inflation target. Worse, Janet Yellen and Stanley Fischer, the chairman and vice-chairman respectively, used the occasion to tell markets to revise up their expectations of near-term rate hikes. Several of the regional Fed presidents suggested that the second rate rise of the cycle could come as early as the September…Continue reading