It Has Just Been Made Clear: Central Banks Aren't In Control, And Don't Pretend To Be

The Jackson Hole symposium highlighted central banks’ uncertainty in a shifting global landscape. Discussions centered on changing R* (neutral short-term interest rate) due to deflation concerns, labor market shifts, energy transition, and geopolitical shocks. The acknowledgment of errors and lack of guidance marked a shift towards wisdom in central bank narratives. Market forecasts still struggle to accept central banks’ reduced control and the potential for deflation.