Jackson Hole speech
US Federal Reserve Chairman Jerome Powell is poised to make a consequential speech on Thursday.
Powell will try to convince the public at central bankers’ annual Jackson Hole summit that the Fed can and will fulfill its duties under conditions where the pandemic has eroded confidence in US institutions and swept away a large portion of the workforce.
Powell will discuss the central bank’s framework review, an initiative that includes public hearings and research to explore how monetary policy should adapt to changes in the economy, in statements online at the Kansas City Fed’s annual economic symposium on Thursday.
The symposium, normally held in the mountain resort of Jackson Hole in Wyoming, but will be held this year via videoconference due to the pandemic, has been used by Fed heads to point out policy changes in the past. This is the expectation in the market when Powell starts his speech.
Japanese economy and Abe’s health
A senior government spokesperson for Japan, the third-largest economy in the world, said Tokyo wants to avoid another state of emergency and should consider more aid to stimulate the economy.
The Shinzo Abe government signaled Tokyo’s determination to focus on reopening businesses devastated by the coronavirus outbreak. Cabinet Secretary-General Yoshihide Suga denied speculation that Prime Minister Shinzo Abe might resign for health reasons, and stated that Abe’s promises that he would continue to do his best on Monday “explain everything”.
Widely seen as one of Abe’s successors, Suga said that even though his associates within the ruling Liberal Democratic Party were to call on him to do so, he had no eyes at the prime ministry and “never thought about” taking the post.
Abe will make a statement about his health on Friday.
Japan, after the nationwide state of emergency measures ended in late May, saw that the numbers of COVID-19 infections revived. The biggest dilemma for the government now is to continue the fight to contain the virus without deepening the economic crisis.
“We want to avoid another state of emergency that could have a major negative impact on the economy,” Suga told Reuters on Wednesday, sending a clear message that their plan is to stimulate economic growth rather than tighten restrictions to contain the virus.
Suga said that promoting tourism would be among the measures to help stimulate the economy. “Japan will do whatever it takes to host the Tokyo Olympic Games next year,” he added.
Taiwan and the South China sea crisis
In the last three weeks, China’s four separate exercises along the coast from the Bohai Gulf in the north to the East, the Yellow, and the South China seas raised concerns in Taiwan island and countries in the region that are at odds with China’s expansionist policies.
The administration on the island of Taiwan, which China claims as a “sacred” region, announced that ground-to-air missiles were watching Chinese warplanes approaching.
Referring to China’s exercises, the Taiwan defense ministry stated on Tuesday that Taipei will respond “more actively” as the Chinese jets approach the island, but they will not “escalate the conflict” or “trigger an incident.”
The US navy, which is legally bound to defend Taiwan, continues to patrol the controversial South China Sea with a carrier strike group in international waters that China claims.
However, the entry of a US U-2 spy plane during Chinese live-fire exercises in an area south of the island of Hainan, where the Chinese Army banned any entry, increased tension and caused a stern protest by Beijing.
Chinese military expert Ni Lexiong, a retired professor at the Shanghai University of Political Science and Law, said it is very rare for China to conduct so many exercises at the same time.
“Exercising in three seas at the same time means that China is testing its ability to fight enemies from three directions at the same time — including Taiwan, Japan, and the US,” he said.
Meanwhile, the US Treasury announced on Wednesday fresh sanctions on 24 Chinese companies and associated individuals for their role in building man-made islands in the international waters of the South China Sea.
“The US is taking action today to support freedom of the seas and to oppose the coercion of our Southeast Asian allies and partners. We must not allow Beijing’s campaign of bullying to prevent access to vital offshore resources and damage critical ecosystems,” the US Secretary of State Mike Pompeo said.