Leaders from major central banks will attend the annual Economic Policy Symposium in Jackson Hole, Wyoming, today to discuss softening domestic outlooks, falling annual growth rates, low inflation and weakening business and consumer confidence.
The meeting comes as countries move to shore up their economies amid rising concerns over global growth and trade conflicts. Indeed, more than 30 central banks have cut interest rates this year, the first time that many major economies have done so since the 2008 financial crisis.
Because inflation and interest rates are already at historically low levels, the rate cuts are increasingly tied to currency devaluation, fostering concerns of a monetary policy race to the bottom. Any stimulus that a central bank gets out of a rate cut thus comes at a direct expense to its trading partners, who must also lower interest rates to avoid curbing their exports.
Due to the sustained economic uncertainty, more central banks may feel forced to consider further rate cuts. However, any rate cuts that affect currency values could prove costly by sparking further trade concerns. The question will ultimately be how big the external risks to the global economy are, something that will be front and centre in Jackson Hole.
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