Powell signals possible Fed rate cuts amid fragile economy

Federal Reserve Chair Jerome Powell suggested at the Jackson Hole Economic Symposium that current conditions “may warrant adjusting policy”, a strong signal that the Fed is preparing for potential interest rate cuts. His remarks come at a pivotal moment for the U.S. economy and global markets.

Powell’s cautious shift

Speaking at 10:00 AM ET (3:00 PM Lisbon), Powell highlighted that the Fed remains data-dependent but acknowledged rising risks in the labor market alongside persistent inflation.
According to Powell, the unusual combination of slowing job growth and sticky prices “creates a challenging environment” that may justify easing policy.

While Powell did not commit to a September cut, markets are now pricing in a 70–75% chance of a 25 basis point reduction, according to CME FedWatch data.

Market reactions

• Treasuries tightened as traders positioned for lower yields.
• The U.S. dollar weakened slightly against major currencies.
• Bitcoin and other cryptocurrencies saw increased volatility, with traders weighing potential liquidity effects of looser monetary policy.

Implications ahead

Powell’s speech signals a turning point:

• If September delivers a cut, it would mark the Fed’s first pivot in over a year of restrictive policy.
• Global risk assets, from equities to crypto, are set to react sharply to any confirmation.

For investors, discipline remains key: avoid trading impulsively on headlines, position strategically on dips, and secure profits on rallies.

Sources:

• Washington Post – Powell says economy ‘may warrant’ rate cuts
• Axios – Fed’s Powell: May be time for another rate cut
• AP News – Powell signals Fed may cut rates soon even as inflation risks remain