Chairman Jerome Powell’s speech on Friday at this year’s Jackson Hole Economic Policy Symposium balanced the risk of increased inflation against vulnerable labor markets, and the political calendar now raises the likelihood that his ultimate successor will be paid too much attention to fees.
Powell’s message was intentionally calm.
He said “the impact of tariffs on consumer prices has become clearer and will continue filtering at uncertain times.” Headline PCE inflation won 2.6% and core 2.9% in July, with commodity prices resurfaced after falling profits last year.
He surrounded the labour market as a “strange balance,” slowing to around 35,000 a month in recent months while unemployment rates are at 4.2% from 168,000 in 2024.
Immigrants are cooled, mitigating labor growth and the break-even pace of employment needed to stabilize unemployment is low, obscuring vulnerability. Net-net said short-term risks are “leaning upwards” due to inflation and “downsides” due to employment.
He also reset the framework.
The Fed has dropped “average inflation targeting” in the 2020s, returning to flexible 2% targeting, revealing that employment can run beyond the estimated maximum level without automatically enforcing hiking, but at the expense of price stability.
He emphasized that “we will not allow a one-time rise in price levels to become an ongoing inflation issue.” The policy is “not a preset course,” and while September is open, the cut series bars on the fast series will look high, as long as the data doesn’t get weaker.
Macrostances land in a new political context that markets cannot ignore. Powell’s current term ends May 15, 2026, and he says he intends to offer it. While Donald Trump is attacking Powell and seeking lower fees, legal protections mean the president cannot rule out a Fed governor or chairman over policy disagreements.
Trump announced Powell’s favorite alternative before 2026, giving the market to the prices of chairs that are likely to be more flashy and more tolerant of growth risk than Powell. Even if the next few FOMC meetings rely on data, this looming shift is important as to how it will evolve in 2026.
Political tensions rose again on Friday. Like Powell, the governor has strong protections and can only be removed for a cause. The market reads this as a threat of immediate governance and more as a sign that HR pressure on the Fed could grow and increase uncertainty about future leadership and communications.
What does this mean for our treasures?
Speech refers to a slow, shallow mitigation pathway in the fourth quarter of 2025, unless inflation recedes persuasively. Tariff pass-through keeps the price of the item sticky, but service gradually becomes easier.
The uncautious chair of the future can later compress term premiums by signaling a faster route to neutral, but this time the rate volatility is high and the meetings are >What does this mean for US stocks?
The careful Fed supports the Softlands story, but not a quick multiple expansion. Revenue growth could carry a benchmark, but rate-sensitive growth stocks remain vulnerable to inflation and surprising wage surprises that cut further.
If the market begins to price a chair that is willing to ease the warm inflation background, periodic caps and small caps can catch bids, but inflation expectations waft up the risk of reliability. For now, stocks are trading the gap between each inflation printing, payroll updates, and FED communications.
What does this mean for cryptography?
Crypto lives at the intersection of liquidity and inflation stories. A high-rise stance will curb the speculative flow of altcoins and crypto-related stocks from companies with heavy miners, exchanges and the Ministry of Finance, as funding costs rise and risk budgets are tight.
At the same time, sustained inflation beyond the target will live on the hard asset narrative and support the demand for assets with shortages or finality of settlement. The combination supports tokens supported by Bitcoin and large cash flows for a long time.
If the successor chair for 2026 is perceived as uncautious, the liquidity cycle could change more critically with crypto favors, but the price to get there is more volatility as trader handicap leadership, Senate confirmation, and data.
Why is the pass more important than the first cut?
Even if the Fed cut rates in September, it’s very likely now, Powell’s framing means glide passes that meet inflation expectations, not market hopes. Small cuts may not be able to unlock growth quickly, as home submissions are muted by mortgage lock-in.
Global mitigation elsewhere adds a slight liquid tailbone, but the premiums of the dollar’s pathway and duration depend on whether US inflation behaves like a one-off tariff shock or sticky process. In the former case, the cryptography width is improved and the risk may rotate beyond the beginning. In the latter, leadership remains narrow and gathering in hot data disappears.
2026 Wild Cards
Currently, the market needs to price two-stage structures. Powell’s careful
For treasurys that can mean a thick term premium until leadership is known; for stocks, it means turnover and termination of factors. For crypto, that means it combined with a stronger medium-term liquidity story and more Choppier’s recent transactions.
Conclusion
Powell asked for time and data as tariffs increased prices and employment engines were downshifting. The market will need to exchange that attention throughout the fourth quarter of 2025, discounting realistic opportunities for the less careful Fed chair in 2026. The two stages will be the following year’s test of patience, grinding inventory and crypto volatility trade.
