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1h ago

Powell Signals Openness to September Rate Cut at Jackson Hole as Markets Rally

Powell’s next move will depend on incoming data given tariff-driven inflation risks.

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U.S. Federal Reserve Chair Jerome Powell holds a press conference following the issuance of the Federal Open Market Committee's statement on interest rate policy in Washington, D.C., U.S., July 30, 2025. REUTERS/Jonathan Ernst/File Photo
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U.S. dollar, Euro and Pound banknotes are seen in this illustration taken May 4, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

Overview

  • Powell said policy remains in restrictive territory and that the shifting balance of risks may warrant adjusting the stance, leaving the door open to a September cut.
  • Traders lifted CME FedWatch odds for a September reduction from roughly 73% pre-speech to above 80%–87% as stocks jumped and the 10-year Treasury yield eased to about 4.26%.
  • He flagged labor-market cooling, noting just 73,000 jobs added in July and sizable downward revisions to May and June that raise downside risks to employment.
  • Powell cautioned that higher tariffs are pushing up goods prices but said the impact is likely temporary, vowing not to let a one-time price increase become persistent inflation.
  • Policy makers remain split and face political pressure, with two governors dissenting for a cut in July and President Trump intensifying criticism and calling for Governor Lisa Cook to resign.