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Fed's Jackson Hole retreat not always restful

Aug 24, 2011, 9:27 a.m.
Morning sun hits the Grand Tetons as bankers and economists gather at the Jackson Hole Economic Symposium in Grand Teton National Park, August 27, 2010. REUTERS/Price Chambers

WASHINGTON (Reuters) - Central bankers and economists from around the globe will once again flock to the Federal Reserve's annual gathering in Wyoming this week, and once again will meet against the backdrop of volatile markets and the prospect of further Fed support for a struggling U.S. economy.

The conference in Jackson Hole is designed as a retreat among the serene vistas of the Grand Teton mountains, allowing policy makers to ponder the latest academic thinking without distractions. But in recent years they have been unable to ignore the economic carnage taking place beyond the picturesque valley.

The event has evolved into an annual check point on the state of play of efforts to contain the damage from one of the worst financial panics and deepest recessions in U.S. history. Last year Federal Reserve Chairman Ben Bernanke's speech laid the groundwork for the Fed's unprecedented $600 billion bond buying program to revive a sputtering U.S. economy.

Bernanke's address this Friday will be keenly watched for hints about whether the U.S. central bank is preparing to take further steps to buttress a crumbling recovery.

Following is a look back at the give speeches Bernanke has made at the conference since becoming Fed chairman.

2006

Bernanke gives his first Jackson Hole speech as Fed chairman. Only two months earlier, the Fed had ended a series of 17 consecutive quarter-point interest rate increases that began in June 2004.

Analysts debated whether the Fed was hurting its inflation-fighting credibility by putting rates on hold too early, or whether bond market anticipation of slow growth in coming months was premature.

Bernanke, the Fed leader since January, looked to be comfortably carrying out the legacy of his much-admired predecessor, Alan Greenspan. He did not discuss the outlook for the economy or policy in a speech that reviewed the history of global economic integration as far back as the Roman Empire.

"The challenge for policymakers is to ensure that the benefits of global economic integration are sufficiently widely shared," he said.

2007

Financial storm clouds had begun to gather all year as the U.S. housing and credit bubbles burst, and by the time Bernanke spoke at the end of August, pressures were becoming acute.

Short-term funding strains escalated over the summer as ratings agencies downgraded bonds backed by subprime mortgages and Bear Stearns suspended redemptions from one of its funds. CNBC presenter Jim Cramer in early August lashed out on air at Bernanke and the Fed for failing to respond to financial market chaos, a widely discussed rant that came to symbolize the intensity of building pressure.

At a policy meeting in early August, the Fed said its predominant policy concern was that inflation would fail to moderate. But within days, it issued a statement saying it would stand ready to provide liquidity to keep financial markets from locking up, and shortly thereafter cut the discount rate it charges banks for emergency loans.

When the Fed chairman stepped to the podium that August, he joked that the year-ago selection of housing, housing finance and monetary policy as the conference theme had been right on target.

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