Fed Poised to Reset Its Strategy at Jackson Hole Symposium

At this year’s Jackson Hole gathering, the Federal Reserve is preparing to roll out a revamped strategic blueprint, recognizing how dramatically the economic picture has evolved since the 2020 shift. Back then, the policy deliberately leaned toward bolstering employment—even at the expense of temporarily higher inflation—to promote broader job gains. Now, with inflation having surged during the pandemic, Chair Jerome Powell is expected to pivot back toward a more traditional emphasis on keeping prices stable as a basis for sustainable employment.
The updated framework is said to prioritize inflation control, saving the inclusive employment language for times of prolonged economic weakness. Fed officials have indicated that the new guidelines will be durable across different economic environments. Observers contend that the 2020 strategy, though well-intentioned, may have delayed the Fed’s inflation response in its early stages, and that former Vice Chair Richard Clarida believes the central bank should now lean into a clearer and more balanced stance.
Powell’s likely message: you can’t have a healthy labor market without first ensuring price stability—a nod to the dual mandate that the Greenspan-era approach once clarified. This recalibration aims to bring renewed clarity and steadiness to the Fed’s mission of managing both inflation and employment.