Crisis to Set Tone of Fed Event

Leading world central bankers will be gathering at a Rocky Mountain resort this weekend for a symposium as a seemingly unstoppable firestorm in the global financial markets continues.

The scheduled topic of the gathering of policymakers, academics and market professionals in Jackson Hole, Wyo., is the issue of rising income inequitability around the globe.

But the unfolding drama in Russia and other emerging markets is likely to feature prominently at the three-day event, the 22nd such symposium organized by the Federal Reserve Bank of Kansas City, participants and analysts said Wednesday.

“I can’t imagine that there won’t be a lot of talk about emerging markets,” said Alan Blinder, former vice chairman of the Federal Reserve Board and now a professor of economics at Princeton University, who plans to attend. “This issue, in varying degrees, has been at the top of the agenda since the Asian crisis broke more than a year ago.”

A full-blown financial meltdown in Russia, aggravated by continuing turmoil across much of Asia and persistent worries over Japan’s ability to see through reforms necessary to rescue its own economy will provide a somber undertone for the meeting.

As the financial crisis that started in July 1997 by Thailand’s devaluation of its currency has slowly spread around the globe, the line between what is domestic and what is international economic policy has become increasingly blurred--so much so that the turmoil in emerging markets has been the key factor in persuading the Fed to hold key U.S. interest rates steady over many months.