Emre Yumlu 
Federal Reserve Chair Jerome Powell delivered key insights on the economy during his Jackson Hole speech. But what do his comments signal for interest rates—hawkish or dovish? Here are the main takeaways.
What Powell Said About Labor Market and Risk Balance
Powell noted that labor supply has weakened in line with demand, while employment growth has sharply slowed near balance levels. He added that shifts in the risk balance may require policy adjustments. According to Powell, downside risks in the labor market are rising, and the overall economic balance is being closely monitored.
Inflation and Tariffs
Recent data shows that 12-month PCE inflation increased by 2.6% in July, with core inflation rising 2.9%. Powell emphasized the slowdown in consumer spending and the impact of tariffs on prices. A reasonable scenario assumes that tariff-related inflation effects will be temporary. However, while persistent inflation pressure is possible, labor market risks likely limit it.
Powell stressed that a one-time rise in price levels cannot be allowed to become a sustained inflation problem.
Is Powell Preparing for a Rate Cut
Following Powell’s remarks, the market is now pricing a 91.3% probability of a Fed rate cut in September, up from 75% prior to the speech. Investors continue to fully price in the possibility of two rate cuts by the end of the year.
Impact on Crypto Markets: Bitcoin and Ethereum Rising!
Before Powell’s speech, Bitcoin traded around $112,500, but during the speech it surged to $115,600. Ethereum also climbed to $4,600. This movement highlights how the Fed’s policy stance and dovish signals can influence crypto assets.
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