Powell's final speech at Jackson Hole carries enormous stakes as Trump expands his offensive against the central bank
Jerome Powell, chairman of the US Federal Reserve, during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, July 30, 2025. (Al Drago/Bloomberg via Getty Images)
Federal Reserve Chair Jerome Powell delivered a major speech on Friday morning in which he opened the door to restarting interest rate cuts in September, causing financial markets to surge.
The annual Jackson Hole Economic Symposium in Wyoming is usually a tranquil affair with the globe's prominent monetary policymakers gathering to discuss and debate labor markets, inflation, finance, and more. But this year's convening has been overshadowed by President Donald Trump's relentless assault on Powell, as he's chipped away at the central bank's independence.
Investors and U.S. policymakers are sifting through Powell's speech for any clue on the timing of the next interest rate cut. He hinted at the possibility of a cut to juice the U.S. economy at the next gathering of Fed officials, given shifting economic conditions from Trump's tariffs and accelerated deportations shrinking the labor force.
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“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance," he said in his speech. "Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."
Financial markets rose sharply on Friday morning as Powell delivered his remarks. The S&P 500 jumped 1.3% while the Dow Jones Industrial Average spiked 700 points, or 1.6%.
Powell elaborated on his views of Trump's import taxes. He said he believed the impact of tariffs on prices are now "clearly visible," and argued they'll be "short-lived" so it wouldn't mandate a drastic change in the Fed's careful approach. Still, he made it clear Fed officials are maneuvering a difficult situation with the threat of inflation on one hand and a weakening labor market in the other, calling it a "challenging situation."
"Come what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem," he said.
Up to now, Fed officials have mostly stood by Powell's assessment that Trump's barrage of tariffs aren't threatening the U.S. economy enough to lower interest rates and juice its growth. Instead, the Fed has held still, even as some of its top officials warn of a weakening job market.
Trump's attacks have thrust the Fed into the national spotlight, a position it's not accustomed to given its usual insulation from day-to-day U.S. politics. He's been irate for much of the year due to the Fed sitting still on interest rates five times in a row. Trump has flung personal insults at Powell and mused about installing himself as Fed chair — and that was just one day this summer. He later toyed with firing Powell before backing off, an apparent recognition of the turmoil that would unleash in financial markets.
Trump later toured the Fed in a televised spectacle to inspect a renovation that's attracted considerable conservative scrutiny. But his offensive hasn't stopped there. On Wednesday, Trump demanded that Federal Reserve Governor Lisa Cook step down over mortgage fraud allegations. For her part, Cook said she will answer questions about her financial history but isn't resigning.
