In his inaugural speech at the Jackson Hole Conference, the Federal Reserve chairman stated that the shift in the balance of risks could justify an adjustment in monetary policy. This indicates his willingness for a rate cut at the September FOMC meeting.
The Federal Reserve chairman also referred to the labor market and the increasing downside risks to employment. He additionally noted that the labor supply has decreased in line with demand. Jerome Powell pointed out that this development has drastically reduced the equilibrium rate of job creation needed to keep the unemployment rate constant.
In summary, the Federal Reserve chairman suggested that recent employment data indicate that the weakening of the labor market is worse than expected. July data showed that non-farm payrolls increased by 73,000, below expectations of 147,000. Meanwhile, May and June data were revised down from 144,000 and 147,000, respectively, to 19,000 and 14,000.
Therefore, they can no longer ignore the downside risks to employment. This contradicts what the FOMC minutes showed, where the Committee indicated that it prioritized upside risks to inflation over downside risks to employment.
Jerome Powell's speech in Jackson Hole has provided a significant boost to the cryptocurrency market, with the price of Bitcoin rising following the Fed chairman's comments. TradingView shows that the flagship cryptocurrency is currently trading above $115,000, up from an intraday low of around $112,000.