The Jackson Hole meeting has not delivered specific guidance for monetary policy; we have to wait for the next ECB meeting and Fed meeting to have more details on their respective future strategy.
During this time, markets and currency will remain data dependent, and the EUR could retest new high versus the USD, as the debate on debt ceiling in the US appears rather confusing.
Contrary to expectations, Yellen and Draghi have adopted a more political tone (regulation, openness for economies) rather than a pure academic and monetary contribution. Away from short-term considerations of markets (inflation, EUR strength, and QE), Ms Draghi argued in favour of opened economies, international cooperation and active regulation in finance. It looks like a highly political subject at a time protectionism is on debate in many countries.
Ms Yellen’s remarks were also far from concerns on US inflation, interest rates and Fed balance sheet, and did not deliver any guidance on monetary policy, preferring focusing on regulation. She clearly disagrees on removing regulation in place after the financial crisis, being only ready to amend it for small banks and small firms on credit, but not for market dealers. She is clearly opposed to what Republicans and the White House want as reforms, fixing limits on a potential second mandate at the Fed. These two central bankers talked more on politics than on monetary subjects, a way to express central banks are independent.
Patrice Gautry - Chief Economist - Union Bancaire Privée (UBP)