Fed’s Powell to Take Center Stage for Final Time at Jackson Hole Retreat

‘I think Powell will stick to the rhetoric he’s been using,’ said one market analyst.

Federal Reserve Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs on in Washington on Feb. 11, 2025. Madalina Vasiliu/The Epoch Times

Federal Reserve chair Jerome Powell will be under the spotlight when he delivers his final keynote address at this week’s annual central bank retreat beginning on Aug. 21.

More than 100 people, including central bankers, academics, and financial industry leaders, will converge on Jackson Hole, Wyoming, for the Federal Reserve Bank of Kansas City’s 43rd Economic Policy Symposium from Aug. 21 to Aug. 23.

This year’s event is titled, “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”

It will be Powell’s final Jackson Hole appearance before his term expires in May 2026. He is delivering the keynote address on Aug. 22, and has historically used the main event to convey pivotal moments for monetary policy.

In 2022, for example, Powell drew inspiration from one of his predecessors, Paul Volcker, to underscore the central bank’s resolve to combat inflation.

A year later, the Fed chief outlined the institution’s cautious approach to monetary policy: While inflation is cooling, the job is not finished.

Weeks before the 2024 presidential election, Powell struck an optimistic tone that rallied Wall Street. However, he did not lay out the super-sized half-point interest rate cut that transpired a month later.

“The time has come for policy to adjust,” he said during a speech on Aug. 23, 2024. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

Economic conditions in August 2025 differ slightly from those of a year ago.

On the one hand, recent data suggest that the U.S. labor market may be starting to deteriorate. In addition to a weaker-than-expected 73,000 new jobs in July, the Bureau of Labor Statistics recorded downward revisions of 258,000 for May and June—the largest two-month negative adjustment since 1979.

On the other hand, new government statistics indicate that tariffs may be affecting the U.S. marketplace. While the headline annual inflation rate in the July Consumer Price Index came in below economists’ expectations, the Producer Price Index and import prices surged in July.

With these latest developments, Powell’s monthslong wait-and-see approach could prove to be warranted or a policy misstep heading into his highly anticipated speech.

Brian Leonard, portfolio manager at Keeley Gabelli Funds, said Powell’s prepared remarks will emulate his commentary over the past several months.

“At Jackson Hole, I think Powell will stick to the rhetoric he’s been using. The tariffs should have some indirect impacts, so a cautious approach is warranted,” Leonard said in a note emailed to The Epoch Times.

Because employment conditions have been in better balance and growth prospects remain intact, Powell and his colleagues have stated over the past several months that the Fed can continue to wait before taking policy action.

Whether the recent numbers will trigger a dovish pivot depends on what the next batch of numbers—non-farm payrolls and inflation for August—suggest about the U.S. economy, according to Chicago Fed President Austan Goolsbee.

“We’re going to have to see where we are. I still think underneath all of this, we’ve been in a strong position on the economy going into April, and there is still a lot of strength in the economy,” Goolsbee told CNBC’s “Squawk Box” in an Aug. 15 interview.

For monetary policymakers, it is a balancing act.

Cutting interest rates could risk resuscitating inflationary forces, but leaving them higher for longer could bolster risks to the labor market and the broader economic landscape.

Wall Street is confident that the policymaking Federal Open Market Committee will lower interest rates next month for the first time since December 2024, penciling in a shift in focus to the employment aspect of the dual mandate.

According to the CME FedWatch Tool, there is an 83 percent chance of a quarter-point reduction.

“Powell could pave the road for a 25 basis-point cut in September, or he could push back on those expectations, or he could simply not discuss policy much at all,” said Tom Essaye, president and co-founder of the Sevens Report Research, in a note emailed to The Epoch Times.

The prepared remarks also will have implications for the financial markets, Essaye said. Pointing to a rate cut would provide investors with optimism, but pushing back against rate-cut expectations would likely trigger a pullback on the New York Stock Exchange.

Until then, traders will have another key Fed-related event before Powell’s speech.

Pitstop for a Few Minutes

On Aug. 20, the Federal Reserve will release the minutes from the July Federal Open Market Committee meeting.

The meeting summary will continue to highlight policymakers’ assessments of economic conditions and their concerns regarding inflation and the labor market.

In July, the Fed kept the benchmark federal funds rate—an influential policy rate that affects business, consumer, and government borrowing costs—unchanged for the fifth consecutive meeting, keeping it within a range of 4.25 percent to 4.5 percent.

The meeting was consequential for two reasons.

First, the Fed witnessed the first double dissent in about 30 years. Christopher Waller, a Fed governor, and Michelle Bowman, Fed vice chair for supervision, supported lowering interest rates. They have since defended their votes, alluding to a deteriorating labor outlook.

In an Aug. 1 statement, Bowman stated that employment conditions have “become less dynamic,” with “increasing signs of fragility.”

“The employment-to-population ratio has dropped significantly this year, businesses are reducing hiring but continue to retain their existing workers, and job gains have been centered in an unusually narrow set of industries that are less affected by the business cycle, including health care and social services,” Bowman said.

Second, the decision to continue pausing its easing cycle occurred two days before the disappointing July jobs report. Market watchers have debated whether monetary policymakers would have cut interest rates if they had had the employment data on hand.

“Had these revised numbers been posted in real time, the Fed would have lowered interest rates, perhaps by 50 basis points,” Jeremy Siegel, senior economist at WisdomTree, said in an Aug. 4 commentary.

“Policy is too tight for the real data. Hopefully, a Jackson Hole Powell pivot is on the horizon.”

The 12-person Federal Open Market Committee will hold its next meeting on Sept. 16 and Sept. 17.