Fed Chair Powell Signals Multiple Rate Cuts After Jackson Hole Speech

Federal Reserve Chair Jerome Powell signaled a dovish stance on monetary policy at the annual Jackson Hole economic symposium, indicating that shifting economic risks and a cooling labor market support the case for upcoming interest rate cuts. Powell acknowledged that tariffs imposed by President Donald Trump's administration have lifted inflation, but described this as a likely one-time shock rather than a prolonged inflationary spiral. He highlighted a unique labor market balance, marked by slowing supply and demand for workers, which raises downside risks for employment and could lead to higher layoffs and unemployment. These remarks boosted market optimism, with expectations growing for at least two rate cuts by the end of 2025, possibly three, starting as soon as September. Financial markets reacted positively, with major stock indexes rising and Treasury yields falling, reflecting investor confidence in the Fed's accommodation. Powell's cautious yet dovish tone contrasts with political pressures from the Trump administration demanding more aggressive rate cuts, illustrating the complex dynamics facing the Fed amid evolving economic conditions.