Spotlight on Powell’s Jackson Hole Speech as Investors Eye Clues on Fed’s Policy Road Ahead

As Federal Reserve Chair Jerome Powell takes on the stage at the Jackson Hole Symposium, later today, investors around the globe will be on a hunt for clues on the future of the US central bank’s policy trajectory. Powell, whose term ends in May 2026, will deliver what may be his final address at the annual gathering, and his words are expected to offer a glimpse into the Fed’s longer-term thinking and the broader outlook for the US economy.

The timing of Powell’s keynote is striking. It comes at a moment when the American economy is grappling with the weight of new trade tariffs, while the central bank itself continues to navigate questions around its independence. The speech, billed as an “Economic Outlook and Framework Review,” suggests Powell will not only reflect on the immediate conditions but also touch on the Fed’s five-year review of its long-term policy goals.

Markets are already abuzz with expectations of a September rate cut. Powell’s Jackson Hole speeches have often been turning points: from signalling quarterly cuts in 2018, to reshaping the Fed’s approach to inflation in 2020, to last year’s nod towards an aggressive September move. Wall Street has long taken its cues from these addresses. This year, CME FedWatch data shows more than 71% of market participants are pencilling in a 25 basis point cut at the Fed’s next September meeting.

Yet, expectations may once again outrun reality. Many experts believe Powell will stop short of openly endorsing a September cut, opting instead for a cautious, data-driven tone. While some anticipate a gentler take on rates, the consensus is that Powell will carefully balance the Fed’s options rather than pre-commit.

So far, only Governors Christopher Waller and Michelle Bowman have explicitly backed a cut in September. Both dissented at the Fed’s last policy meeting, where they voted in favour of rate cuts. Investors will be particularly alert to Powell’s take on the labour market and how he frames the inflationary knee-jerk effects from President Trump’s tariffs.

The latest labour data paints a mixed picture. The Bureau of Labour Statistics reported marginal job growth in July, with the prior two months revised sharply lower. Even so, many Fed officials have continued to describe the labour market as ‘solid,’ signalling less urgency for immediate cuts. Minutes from July’s meeting, meanwhile, revealed a stronger current of concern around inflation among FOMC members. That, too, suggests Powell may lean towards restraint for now.

But if Powell leaves markets with more ambiguity than clarity, the consequences may not be limited to investors alone. The lack of an explicit steer towards rate cuts could give an ick to US President Donald Trump, who has repeatedly criticised Powell for dragging his feet on rate cuts and even called for his resignation.

For Powell, then, the stage at Jackson Hole is once again a careful balancing act between the hunger for reassurance for market participants, a President’s pressing demands for rate cuts and the Fed’s own mandate to remain steady in the face of uncertainty.