Powell Delivers Jackson Hole Address, Signals Shift in Fed Strategy

August 22, 2025 – JACKSON HOLE, Wyo. – Federal Reserve Chair Jerome Powell spoke today at the Kansas City Fed’s Jackson Hole symposium. He announced a big shift from the Fed’s five-year-old rate-setting plan. Powell also suggested a careful approach to possible rate cuts later this year.

Powell started by stressing the Federal Reserve’s independence. He noted that monetary policy decisions rely only on economic data and risk assessments, not on political pressures. He reiterated that the Fed’s dual mandate-maximum employment and price stability-remains paramount.

In the highly awaited “Economic Outlook and Framework Review,” Powell revealed a big change. Officials will end the flexible average inflation targeting set in 2020. They will now focus on being more proactive about controlling inflation. The Fed used to allow higher inflation to boost jobs. But now, Powell says the bank will act faster to control rising prices.

Powell faced strong pressure from President Trump to cut rates. However, he did not commit to a September rate cut. Instead, he promised to assess economic data first. Futures markets now give a 75% chance of a quarter-point cut at the Fed’s meeting on September 17. That’s down from nearly 95% earlier this month.

Global markets reacted immediately. Gold prices fell as the U.S. dollar strengthened. Investors took in Powell’s cautious stance on easing soon. U.S. equity futures climbed a bit. The S&P 500 ended a five-day losing streak. Investors hope the Fed will wait before lowering borrowing costs.

Powell’s speech talked about key economic issues. He mentioned an aging workforce and the long-term outlook for inflation. He presented today’s policy shift as part of a bigger plan. This aims to improve the Fed’s long-term strategy. It helps future leaders follow a clear approach to managing inflation.

Analysts hailed the speech as a fitting capstone to Powell’s tenure at Jackson Hole. ““This address is a manifesto for the Fed’s future,” said Daniel Altman, chief economist at High Yield Economics. As Powell serves as chair until May 2026, markets will watch closely. They want to see if today’s changes lead to actual policy actions soon.