Summary of Powell's speech tonight (August 22, 2025, at Jackson Hole)

1. The economy faces a 'dilemma':

• Powell acknowledges the delicate balance between persistently high inflation and a weakening labor market, creating conflicting pressures on monetary policy  .

2. Updates on Tweaks in the Fed's 'framework':

• The Fed has abandoned the 'makeup' strategy (allowing inflation to exceed 2% to compensate), returning to a more flexible approach in controlling long-term inflation .

• The commitment to maintain long-term inflation expectations remains emphasized — avoiding a temporary price shock from becoming a permanent issue .

3. Strong signals: the possibility of early interest rate cuts:

• Powell opens the 'door' to the potential for rate cuts at the September meeting, despite maintaining a cautious scenario .

• The market reacts extremely 'enthusiastically': the Dow surges 700 points, with the S&P and Nasdaq also soaring after this statement .

4. Risks remain risks:

• Powell warns that high tariffs and tight immigration policies may continue to exert pressure on prices, especially for goods   .

• He emphasizes that he will closely monitor upcoming data — not rushing to act, maintaining the Fed's 'data-driven' style    .

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To the point: Powell has just hinted at the 'at least possibly' signal for interest rate cuts in September. But he still insists on caution, acting based on data. The market has 'raised the green flag' as it senses 'easing is coming soon'.

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