Here's the important stuff that happened in Jackson Hole this weekend
What Stanley Fischer said
The big highlight of the event was the speech from Fed Vice Chair Stanley Fischer, who said we didn't need to see inflation pick up to justify a rate hike. The key quotes:
Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further ... With inflation low, we can probably remove accommodation at a gradual pace. Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2% to begin tightening.
What the other Fed members said
Fischer's colleagues at the Fed generally shared that sentiment. Deutsche Bank's Jim Reid summarizes:
It wasn't just Fischer we heard from at the event. Speaking on Friday, more hawkish commentary came in the form of non-voters Mester and Bullard. Mester in particular said that 'my view so far in looking at all of the factors is that the economy can sustain an increase in interest rates', while Bullard signaled that the volatility of the last 10 days would not be enough to change his view that the US economy can sustain a rate rise. The lone voice in the dovish camp on Friday, Kocherlakota, said that 'I don't see a near term increase in interest rates as being appropriate, and by near-term I mean really through the course of 2015'. Meanwhile Lockhart, speaking once again, commented that timing for liftoff 'is close' but that it's an 'open question' whether the Fed moves now or waits a little, noting that the October FOMC is a 'live meeting' and 'in play'.
What the world's central bankers said
And the Fed's overseas peers were equally comfortable with what they were seeing. Here's Societe Generale's Michala Marcussen:
BoE Governor, for his part, played down the China slowdown noting this did not yet warrant a change to BoE strategy. Vice President Constancio also sounded confident in the ECB's ability to close the output gap and raise inflation. More worrying, RBI Governor Rajan warned that central banks should not be overburdened and noted mispricing of certain assets. Also notable was the apparent lack of discussion on what tools central banks have left to fight new downside risks; and this at a time when one of the more effective QE channels of emerging economies' leverage expansion has lost its punch. A topic perhaps for the 4-5 September G20 in Ankara.
The US's neighbors to the south said they'd be happy to see a rate hike.
"If the Fed tightens, it will be due to the fact that they have a perception that inflation is drifting up, but more important that unemployment is falling and the economy is recovering," Bank of Mexico Governor Agustin Carstens told Reuters in an interview. "For us, that is very good news."
And then there was that paper about exchange rates
As for the academics' take, one of the more attention-grabbing papers came from Harvard economics professor Gita Gopinath, titled "The International Price System." From Societe Generale's top currency guru Kit Juckes, who characterized it as one of the "two most notable takeaways" from the symposium (Fischer's speech being the other):
Gita Gopinath's paper concluding U.S. inflation is relatively insulated from exchange rate shocks, while other countries are highly sensitive to it has been much discussed in social media over the weekend, while Stanley Fischer's thoughts on monetary policy were inevitably the main source of news headlines...
...The Gopinath paper has left me pondering how to untangle the effect on inflation of an exchange rate adjustment and that of a fall in oil or commodity prices. A strong dollar doesn't cut US import prices because imports are invoiced in dollars but a strong dollar correlates massively with falling commodity prices and those do have an impact on inflation. By the same token, the upward pressure on Japanese prices of a weak yen is offset by falling commodity prices, and so on. Not that it changes much for the US, where the core PCE deflator's running at 1% y/y and wage growth is at 2.1%.
This was Jackson Hole 2015 in a nutshell.