Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Powell Opens Door to Rate Cut as Markets Surge
Economy | Aug 22, 2025
Image: Freepik
Powell Signals Possible September Rate Cut, Igniting Market Rally
On Aug 22 2025, Federal Reserve Chair Jerome Powell delivered his Jackson Hole speech that suggested an interest rate cut may be on the table as soon as September. His comments came as the central bank weighs a weakening labour market and persistent but easing inflationary pressures.
See: H1 2025 Global Fintech Funding Slows, Some Sectors Firing
Powell described a slowing economy with payroll job growth falling to just 35,000 per month over the past three months compared with 168,000 per month in 2024. The 4.2% unemployment rate is up from lows reached last year. He noted that downside risks to employment are rising even as tariff related price increases continue to flow through supply chains.
Image: US Unemployment Rate (Bureau of Labor Statistics)
Powell, Fed Reserve Chair, importantly said:
"[With policy already in restrictive territory] the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
Markets Surge on Dovish Tone
Equity markets surged immediately following Powell’s comments. The S&P 500 and Nasdaq rose more than 1.5 percent by noon Friday, the Dow Jones Industrial Average climbed more than 900 points, and the Russell 2000 gained 3.8%. Treasury yields moved lower while the US dollar weakened. Crypto assets also rallied with bitcoin up 3.8% and ether jumping 13.2%.
Market participants interpreted Powell’s message as a strong hint at near term easing. The CME FedWatch tool now shows a near 90% probability of a 25 basis point rate cut in September. Analysts argue that Powell is signalling a tilt toward supporting jobs while treating tariff driven inflation as more temporary. The Fed’s tone has shifted from a singular focus on inflation to a more balanced consideration of employment risks.
Outlook
The Federal Reserve’s final decision will be based on incoming data. The August employment report and mid September inflation release will be critical in determining whether the Fed follows through with a rate cut. As Powell emphasized, monetary policy will depend on how the evolving balance of risks plays out.
Read: Fintechs Lead NPS Race as Banks Lag Behind
The bottom line is that Powell’s Jackson Hole remarks have repositioned the Fed’s policy stance. By acknowledging weakening labour conditions while downplaying longer lasting inflation threats, Powell has set expectations for a September rate cut, and markets have already pricing in an easier policy, triggering a broad a rally across stocks, bonds, and crypto.
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