Powell signals possible rate cuts at Jackson Hole

Powell’s Jackson Hole speech could steer expectations for the Fed’s September move amid inflation and tariff pressures.

Powell Signals Possible Rate Cuts at Jackson Hole

Powell will address the audience at Jackson Hole on Friday with a focus on the economy and the Fed framework. The central bank’s target range for the fed funds rate sits at 4.25% to 4.5%, and markets have been pricing in a rate cut for September. The CME Group’s FedWatch tool estimated an 83% odds of a cut as of last week, adding to the onstage suspense. Analysts say the speech could unfold in three broad ways: a clear signal that rate cuts are coming, a reminder that inflation remains a concern and a cut may be premature, or a cautious, data dependent stance that defers a decision until more data arrive. Tariffs implemented by the Trump administration have fed into prices and complicate the inflation outlook.

Powell faces a delicate balance. A firm signal of a September cut could boost market confidence but risk overstating the pace of relief if inflation sticks. Conversely, a strong inflation signal could push the Fed toward patience, arguing that the policy stance should stay restrictive until prices cool. The Jackson Hole moment matters because it tests the credibility of the Fed’s data driven approach in a year of trade policy turbulence and shifting growth signals. The outcome will influence how investors trim risk in the months ahead and how policymakers frame the path to a stable, low inflation economy.

Highlights

Jackson Hole may set the tempo, but data will ultimately decide the tempo.