Federal Reserve Chair Jerome Powell signaled a possible interest rate cut in September, prompting a rally across financial markets on Friday. His comments at the Kansas City Fed’s annual Jackson Hole symposium struck a more dovish tone than investors had anticipated.
Powell Flags Employment Risks
Powell said the balance of risks is shifting and warned of potential weakness in the labor market. “Downside risks to employment are rising,” he said. “If those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”
Markets had expected Powell to stick to a firmer line. Ahead of his speech, traders saw only a 69% chance of a September rate cut. Following his remarks, those odds surged to nearly 90%, according to CMEFedWatch.
Following Powell's remarks, Bitcoin rose about 4%, trading at $116,834 at the time of publication. The cryptocurrency had fallen nearly 10% over the past week from a record high above $124,000 as easing expectations faded. Ether also recovered, gaining almost 8% after a 12% drop earlier in the week.
U.S. equities moved higher, with the Nasdaq reversing part of its recent 3% decline. Treasury yields eased, with the 10-year falling six basis points to 4.27%. The dollar index slipped 0.5% while gold added 0.6%.
Volatile Week for Markets
Powell’s comments quickly shifted sentiment. With the Fed now seen as more likely to move in September, investors are preparing for another round of volatility as economic data and central bank signals guide the weeks ahead.
JUST IN: ???????? Fed Chair Jerome Powell suggests current conditions 'may warrant' interest rate cuts. pic.twitter.com/Ogn5NsxHOz
— Watcher.Guru (@WatcherGuru) August 22, 2025
Jerome Powell steps onto the Jackson Hole stage this Friday carrying the weight of politics, markets, and his legacy, CNBC reported. In what is expected to be his final keynote at the Federal Reserve’s annual gathering, the Fed Chair faces the delicate task of balancing policy direction with rising political scrutiny.
Investors and policymakers alike will be watching closely to see whether Powell hints at a September rate cut or redefines the central bank’s long-term strategy.
Powell has spent much of his tenure reinforcing the Fed’s independence in the face of relentless political pressure. President Donald Trump has repeatedly pressed him to cut interest rates, while more recent criticism has extended beyond monetary policy to disputes over Fed projects and even accusations against Fed officials.
This article was written by Jared Kirui at www.financemagnates.com.
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