Jerome Powell Signals September Rate Cuts at Jackson Hole

- Powell’s speech triggered Dow gains and falling yields. - Markets anticipate rate cuts amid economic uncertainty. During his speech at the annual economic symposium in Jackson Hole, Wyoming, on August 22, 2025, Federal Reserve Chair Jerome Powell signaled potential interest rate cuts for September, citing rising economic risks and increased uncertainty. He noted that the “balance of risks appears to be shifting,” which “may warrant adjusting our policy stance.” According to Bloomberg on August 22, Powell’s comments sparked a stock market rally, causing the Dow Jones Industrial Average to surge significantly. In a related market reaction, Treasury yields declined notably, reflecting investor anticipation of potential monetary easing. While Powell acknowledged the labor market's resilience, he expressed uncertainty about the economic outlook, citing factors such as inflationary pressure from tariffs. This potential policy adjustment comes as the Federal Reserve currently maintains the interest rate within the target range of 4.25% to 4.5%. Furthermore, he highlighted the risk of slowing growth alongside rising prices, a scenario that could complicate policymakers' decisions. In his address, Powell also reflected on the Federal Reserve’s recent five-year strategy review and the challenges of high inflation, admitting that the central bank’s initial characterization of the post-pandemic spike as “transitory” was incorrect. Nevertheless, he reaffirmed the Fed’s commitment to its 2% inflation target and emphasized that future policy decisions must remain independent and grounded in economic data.