Powell’s Jackson Hole shift sparks a stock rally — and a rethink on cuts

At Jackson Hole, Fed Chair Jerome Powell unveiled revisions to the Fed’s longer-run framework—most notably dropping any firm commitment to persistently low rates and abandoning the prior “makeup” approach—while emphasizing that policy remains restrictive and decisions will stay data-dependent. His tone opened the door to rate cuts if incoming data justify them, triggering a swift market response: equities jumped on renewed odds of a September cut, and front-end yields eased as traders repriced the timetable. The message was calibrated—flexible rather than decisive—leaving investors to weigh softer rhetoric against a still-solid labor market.

Market Reaction and Headlines from Major Outlets — Risk of a Rate Cut Heightened

• Powell’s emphasis: Changing economic risks—especially a weakening labor market—may justify a rate cut, even as timing remains data-dependent.
• Financial Times: Highlights labor-market cool-down and tariff-driven inflation as drivers toward cuts; notes “shifting” risks that strengthen the case for easing.
• Washington Post: Powell stressed caution and Fed independence, offering no specific schedule for cuts and no defined timetable.
• AP News: Investors rallied—S&P 500 up 1.3%, Dow up 1.4%—while Treasury yields fell as markets read the speech as opening the door to cuts.
• Reuters: Powell struck a balanced tone amid political pressure, signaling openness without a firm commitment to a rate cut.
• Wall Street Journal: Powell flagged job-market vulnerabilities, maintained vigilance on inflation, and suggested tariff-induced price pressures may prove temporary.