Topline<\/p>\n
Federal Reserve Chair Jerome Powell on Friday signaled openness to possible interest rate cuts in his final appearance at the Fed\u2019s annual symposium in Jackson Hole, Wyoming, sparking a broader market rally on the hopes of a loose monetary policy.<\/p>\n
Powell has faced pressure from Trump to lower interest rates.<\/p>\n
Getty ImagesKey Facts<\/p>\n
\u201cThe stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,\u201d Powell said in prepared remarks<\/a>, adding, \u201cNonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.\u201d<\/p>\n The labor market was in good shape and the American economy has shown \u201cresilience,\u201d Powell said, noting tariffs \u201ccould spur a more lasting inflation dynamic\u201d that may be \u201ca risk to be assessed and managed.\u201d<\/p>\n There is a \u201creasonable base case\u201d that tariff impacts will be \u201cshort lived\u201d and a \u201cone-time shift in the price level\u201d that would not support higher interest rates, Powell suggested while reiterating he believed the possible effects of tariffs on prices remains uncertain.<\/p>\n Powell said the \u201cbalance of risks appear to be shifting\u201d between the central bank\u2019s dual mandate of full employment and stabilized prices, citing \u201csweeping changes\u201d in trade, immigration and tax policy.<\/p>\n Powell, in an apparent pushback to political pressures, emphasized decisions by the Fed on monetary policy are based on economic data: \u201cWe will never deviate from that approach.\u201d<\/p>\n The Dow Jones Industrial Average jumped by more than 860 points (1.9%) to a fresh intraday high in the wake of Powell\u2019s remarks, while the S&P 500 rallied 1.5% and Nasdaq jumped nearly 2%.<\/p>\n Crucial Quote<\/p>\n Powell\u2019s Jackson Hole speech was \u201cmore dovish than markets were braced for,\u201d said Stephen Brown, Capital Economics\u2019 deputy chief North America economist. His comment on conditions possibly warranting a policy adjustment \u201cis a clear indication that a September rate cut is now the most likely outcome,\u201d Brown added.<\/p>\n Which Stocks Were Powered By Powell\u2019s Jackson Hole Remarks?<\/p>\n A broader market rally was headlined by gains for Nvidia (1.3%), Meta (1.9%), Broadcom (3.2%), Tesla (5%), AMD (2.4%), Apple (1.5%) and Microsoft (1%). <\/p>\n Big Number<\/p>\n 91.3%. Those are the odds the Fed lowers interest rates by a quarter-point in September, according to CME\u2019s FedWatch. Odds surged<\/a> earlier this month to as high as 99.9% after inflation rose slower than expected<\/a> in July. Jeffrey Roach, LPL Financial\u2019s chief economist, wrote at the time he expected the Fed to cut rates as the central bank focuses on the \u201cweakening labor market.\u201d<\/p>\n What Has The Fed Said About Lowering Interest Rates?<\/p>\n The Fed has maintained that up to two interest rate cuts of 25 basis points will be carried out by the end of the year. Minutes released Wednesday from the Fed\u2019s Federal Open Market Committee’s July meeting<\/a> indicated \u201calmost all\u201d policymakers believed it was \u201cappropriate\u201d to hold interest rates, as Powell noted the central bank wanted to observe incoming data on jobs and inflation. Fed governors Michelle Bowman and Christopher Waller voted against leaving rates unchanged, arguing a quarter-point reduction was necessary to defend against a weakening job market. The Fed pointed to the \u201cuncertain effects of tariffs and the possibility of inflation expectations becoming unanchored,\u201d according to the minutes, which revealed policymakers believed inflation risks were greater than concerns over low unemployment. The meeting preceded a jobs report<\/a> indicating job growth remained weak in July and that growth in June and May was worse than originally reported.<\/p>\n How Does The Market React To Jackson Hole Speeches?<\/p>\n The broader market rallied following last year\u2019s Jackson Hole address, during which Powell signaled the \u201ctime has come\u201d for the Fed to loosen its monetary policy and lower interest rates. The Dow Jones Industrial Average jumped 400 points, or about 1%, while the S&P 500 and Nasdaq increased 1.3% and 1.8% toward then-intraday highs. In 2022, after a Hawkish speech by Powell, the S&P dropped by more than 3% as the Fed later began hiking interest rates.<\/p>\n What To Watch For<\/p>\n The Bureau of Labor Statistics will release data for the Fed\u2019s preferred inflation gauge on Aug. 29. Annual inflation is expected to decline to 2.6% based on core personal consumption expenditures (PCE) price index data, according to a Dow Jones consensus. Core PCE is closely watched<\/a> by the Fed because it allows the central bank to have a better account of how American consumers spend their money.<\/p>\n Key Background<\/p>\n Powell and the Fed have faced growing criticism from President Donald Trump over the central bank\u2019s decision not to cut interest rates. Trump has repeatedly called Powell \u201ctoo late\u201d while urging Powell, whose term expires as Fed chair in May 2026, to resign. Trump previously expressed confidence that Powell would \u201cdo the right thing,\u201d but now believes the \u201cdamage [Powell] has done by always being too late is incalculable.\u201d<\/p>\n Who Could Replace Powell As Fed Chair?<\/p>\n A number of candidates have reportedly been named as possible successors to Powell, including Fed governors Bowman, Waller and Philip Jefferson, White House economist Kevin Hassett and former Fed governor Kevin Warsh. Other names have emerged in recent weeks, including BlackRock\u2019s Rick Rieder, Jefferies\u2019 David Zervos, economist Mark Summerlin and former St. Louis Fed President James Bullard. Trump previously said<\/a> four candidates were in the running for Fed chair, including Warsh and Hassett, though Treasury Secretary Scott Bessent told CNBC<\/a> earlier this week there are 11 names under consideration. Bessent indicated interviews for the role would start sometime after Labor Day.<\/p>\n Tangent<\/p>\n Trump on Friday said he would fire Fed Governor Lisa Cook unless she resigned, telling reporters, \u201cWhat she did was bad.\u201d Earlier this week, Trump called for<\/a> Cook\u2019s resignation after Federal Housing Finance Agency Director Bill Pulte accused her of mortgage fraud. Cook denied the claims in a statement to Forbes, arguing, \u201cI have no intention of being bullied to step down from my position because of some questions raised in a tweet.\u201d Cook is the latest high-ranking Democrat and Trump critic to face similar allegations by the Trump administration, as Attorney General Pam Bondi has ordered an investigation into mortgage fraud claims against Sen. Adam Schiff, D-Calif., and New York Attorney General Letitia James.<\/p>\n Further ReadingForbesFederal Reserve\u2019s Cook Latest Trump Target Of Mortgage Fraud Allegations\u2014She \u2018Must Resign Now,\u2019 He SaysBy Ty Roush<\/a>ForbesMost Fed Officials Expect 2025 Rate Cuts Despite Tariff Inflation Concerns, Minutes ShowBy Derek Saul<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Topline Federal Reserve Chair Jerome Powell on Friday signaled openness to possible interest rate cuts in his final…\n","protected":false},"author":2,"featured_media":366347,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,32,1700,1646,7372,478,128254,17178,23105,1757,16,15],"class_list":{"0":"post-366346","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-donald-trump","10":"tag-economy","11":"tag-fed","12":"tag-federal-reserve","13":"tag-interest-rates","14":"tag-jackson-hole","15":"tag-jerome-powell","16":"tag-powell","17":"tag-trump","18":"tag-uk","19":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115076109731869551","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/366346","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=366346"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/366346\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/366347"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=366346"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=366346"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=366346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}