- Powell may signal a September rate cut as labor market data shows weakening job growth.
- Inflation risks from new tariffs could lead Powell to curb expectations for immediate easing.
- Powell may stay neutral, keeping markets data-dependent ahead of the September FOMC meeting.
All eyes are on Federal Reserve Chair Jerome Powell, who is set to deliver a pivotal speech at the annual Jackson Hole economic conference this Friday. His address, titled “Economic Outlook and Framework Review,” is scheduled for 10 a.m. Eastern Time and is expected to give the market critical clues about the Fed’s next move on interest rates.
This speech presents itself as a climax of a Critical Week in Crypto that has already been packed with market-moving events.
The Three Scenarios on the Table
Market experts have outlined three primary directions Powell could take, each with significant consequences.
Scenario 1: The Dovish Signal. Powell could signal that a rate cut is imminent. The CME FedWatch tool had earlier shown futures markets pricing in a 79.2% probability of a September cut. A dovish tone would suggest the Fed is concerned about the slowing labor market and is ready to act.
Scenario 2: The Hawkish Warning. Alternatively, Powell could pour cold water on market expectations by focusing on renewed inflationary pressures. The recent tariffs introduced by President Donald Trump have raised concerns about a fresh inflation wave that could keep the Fed on hold.
Scenario 3: The Neutral, Data-Dependent Path. A third option is for Powell to remain neutral, making no firm commitment. Economists at UBS suggest he may simply highlight the Fed’s “data dependence,” leaving the final decision for the September 17 FOMC meeting.
What This Means for the Crypto Market
The outcome of Powell’s remarks will have major implications for crypto. A dovish signal for lower borrowing costs would ease financial conditions, historically driving inflows into risk assets like Bitcoin and Ethereum. A hawkish focus on inflation, however, could restrain liquidity and trigger a new wave of volatility.
This is not the first time the Fed’s broader policies have impacted the space, with the central bank stepping in to End Specialized Crypto Oversight.
One is to note that in 2024, Powell used his Jackson Hole address to confirm the Fed’s readiness to cut rates, a move that sparked a significant rally across both stocks and cryptocurrencies.
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