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Fed Chair Powell Signals Potential Rate Cuts, Policy Shifts at Jackson Hole
22 Aug
Summary
- Investors watching for hints about interest rate cuts in Powell's speech
- Fed officials divided on timing of rate cuts, some express caution
- Powell expected to announce changes to Fed's inflation targeting strategy
On August 22, 2025, Federal Reserve Chair Jerome Powell is set to deliver a closely watched speech at the Jackson Hole symposium. Investors are closely following the event, hoping to get hints about potential interest rate cuts as soon as next month.
However, the Fed appears to be divided on the timing of any rate cuts. While some officials, like Michelle Bowman and Chris Waller, have been vocal about the need for rate cuts, others, such as Kansas City Fed President Jeffrey Schmid and Cleveland Fed President Beth Hammack, have expressed caution, saying the current inflation data does not yet justify reducing rates.
Beyond the immediate question of rate moves, Powell's speech is expected to address two much bigger issues shaping the future of the central bank and his legacy as chair. The Fed is likely to announce changes to its policy framework, particularly signaling an end to the average inflation targeting strategy introduced before the pandemic. There is an expectation that the Fed would shift back to focusing on a straight 2% inflation target.
The speech also comes amid political tensions, with President Donald Trump recently urging the removal of Federal Reserve Governor Lisa Cook over a controversy involving mortgage loans. Despite these pressures, Powell has emphasized the importance of the Fed's independence, stating that it has "served the public well" and should continue to be respected.
