Just as they thought they could begin moving away from crisis mode, China's turmoil has become a new threat to the world's top central bankers.
The China crisis will be an ominous cloud over the annual gathering of US and foreign central bank officials and experts beginning Thursday in Jackson Hole, Wyoming.
Beijing's deepening economic problems have sent share markets tumbling and shaken currency markets around the globe
The country's apparent spending of hundreds of billions of dollars in reserves to support its yuan currency, after a modest early-August devaluation, ominously suggests more coming depreciation for the yuan that will batter other emerging-market currencies and send the dollar higher, possibly slowing growth in the US economy.
The most immediate challenge is for the host at Jackson Hole, the Federal Reserve.
Before Beijing sent markets into free-fall with its surprise August 11 devaluation of the yuan, by 2.8 percent versus the dollar, the Fed was on a path toward raising interest rates for the first time in more than nine years.
That move, which could have come as early as next month, is now likely off the table, most analysts agree.
US economic conditions by most views support a rate rise, and the economy would not suffer. On Thursday the government raised its estimate of economic growth in the April-June quarter to a surprisingly strong 3.7 percent annual pace, and other indicators -- job creation, housing, service sector growth -- have all been reasonably strong.
But on Wednesday the head of the Fed's New York branch, William Dudley, said the need to begin normalizing US monetary policy next month after years in a crisis stance "seems less compelling to me than just a few weeks ago."
"The slowdown in China could lead... to a slower global growth rate and less demand for the US economy," he said.
Dudley stressed that policy decisions have to look forward, not backward.
"At the end of the day, we're concerned about the outlook, how is the economy going to perform in the future. It's not just how we are performing today."
"And there, international developments and financial market developments do have relevance because they can impinge and affect the economic outlook."
Fed Chair Janet Yellen will not be at Jackson Hole, but her deputy, Stanley Fischer, will be giving a keynote speech on Saturday. Whether he amplifies on Dudley's comments or not, most analysts believe Dudley's thinking is closely aligned with both Yellen's and Fischer's.
- Low inflation in focus -
The theme of this year's Jackson Hole symposium, "Inflation Dynamics and Monetary Policy", hones in on why the Chinese slowdown is equally trouble for the European Central Bank and the Bank of Japan, both of which continue to pump billions of dollars' worth of liquidity into markets each month under quantitative easing (QE) stimulus programs.
The aim of central bankers in Tokyo, Frankfurt and Washington has been to get businesses and people to spend, ultimately to produce jobs and bring inflation up to around two percent.
Because China represents about 15 percent of the global economy, the slowdown is already pushing prices down everywhere, and its devaluation will just do more of that.
The result is that the Fed, ECB and BoJ could expect slower inflation -- with a revived threat of deflation -- and feel pressure to increase stimulus, rather than, like the Fed has intended, to move away from it.
Dudley said Wednesday that there was no thought of the Fed resuming its QE programs, shut down now for nearly a year. But some economists say that, if China's economy really stalls, that could be required.
On Wednesday ECB executive board member Peter Praet said they are prepared to expand QE if China's slowdown further dampens inflation.
And after Japan's economy contracted in the second quarter, BoJ chief Haruhiko Kuroda said earlier this month that it was prepared to expand QE.
The central bankers have time, and the rebound in stock markets in Asia, Europe and the United States over the past two days suggest the immediate crisis is being contained.
Michael Taylor, head of British investment adviser Coldwater Economics, said that with patience, the global fall in prices, especially of key commodities like oil, will turn into a pickup in global demand over the next half year -- which would take the pressure off the major central banks.
"I think just the uncertainty will keep the Fed on hold, even though monetary conditions are turning up, and you should expect global demand to pick up with it over the coming six months," he said.