Next week's annual meeting of global central banks: the U.S. economy defies rate hikes and ignores recession expectations

The theme of this year's annual central bank meeting in Jackson Hole, “Reassessing the Effectiveness and Transmission of Monetary Policy”, will address the strength of the United States economy in the face of interest rate hikes of more than 5 percentage points and its defiance of numerous recessionary forecasts. Monetary policy may not have as much impact on the real economy compared to past interest rate cycles, both due to the legacy of low interest rates that prevailed from 2009 to 2022 and structural changes in the economy. Millions of homeowners still hold 30-year mortgages with interest rates below 4 percent, and corporations have similarly taken advantage of ultra-low interest rates by refinancing and extending loan terms in advance of rate hikes. In fact, many of the largest U.S. companies are net interest earners.