Powell’s Jackson Hole Speech: Shaping a New Economic Landscape

In his landmark Jackson Hole address, Fed Chair Powell highlighted a pivotal shift in economic policy. He pointed to a delicate labor market affected by immigration changes, facing persistent inflationary pressures from tariffs, creating a challenging scenario for the Fed. Tightening could hurt jobs, while easing might increase inflation.

The key takeaway is that the rate-hiking cycle appears to be over. While an immediate rate cut is not expected and would require a significant downturn in economic data, the labor market will be the main driver. Any signs of weakening employment could trigger rapid market reactions, leading to expectations of rate cuts, potentially weakening the dollar and releasing a wave of liquidity.

For crypto markets, this liquidity surge could be a major catalyst. Bitcoin, as a liquidity-sensitive asset, may be ready for a strong breakout if this scenario unfolds.

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