Fed signals at Jackson Hole

Markets expect a September Fed cut, but the Powell speech and the framework review could alter the timetable amid inflation and tariff pressures.

Powell faces uncertain Jackson Hole with September rate cut at risk

Markets have priced in several rate cuts for 2025, and September has long been seen as the starting point. Ahead of the Jackson Hole symposium, traders pushed odds of a reduction to around 85 percent, according to CME FedWatch, down from above 95 percent a week earlier. A handful of data releases in the past days have cooled the enthusiasm, leaving a scenario in which a hold becomes more plausible.

Powell’s address at Jackson Hole is expected to touch on the Fed’s framework review, a topic last reshaped in 2020 with the shift toward average inflation targeting. Deutsche Bank strategists note the Fed’s website subtitle on the event hints at policy signals that could reframe how the central bank uses preemption. If inflation stays stubbornly above target and tariffs bleed into prices, the case for a swift cut fades, and the September move could hinge on fresh jobs and inflation data.

The market set up a fragile consensus: low rates now, higher prices later. If the framework review leans toward reviving a strong preemptive stance, the Fed could resist easing even when growth cools. Tariffs and persistent inflation add real headwinds, complicating the roadmap for 2025. The Jackson Hole discussion may not deliver a single rate decision but it can reset expectations for the rest of the year and beyond, heightening volatility as investors reassess what the Fed will tolerate in a data-driven, tariff-influenced economy.

Highlights

Jackson Hole will reveal how much the Fed trusts the data to guide a steady path forward.