Key Takeaways
- Jerome Powell hinted at a rate cut for September.
- Bitcoin rose 1% to $62,000 following his speech.
- Markets are now debating a 25 vs. 50 basis point rate cut.
Jerome Powell, Chair of the Federal Reserve, confirmed that a rate cut is likely in September during his speech at the Jackson Hole Symposium.
He noted that inflation is on track to return to 2% and that the labor market has significantly cooled, reducing the need for further tightening.
Powell, signaling the central bank’s shift toward easing, said:
The time has come for policy to adjust.
He emphasized that the pace of rate cuts would depend on future economic data, with markets now debating whether the Fed will cut by 25 or 50 basis points.
Bitcoin’s response
Bitcoin responded by rising over 1% to $61,900.
Traditional markets followed suit, with the Nasdaq and S&P 500 climbing 1.7% and 1.2%, respectively.
The 10-year Treasury yield also dipped to 3.80%, while the U.S. dollar index fell by 0.6%.
Since early 2022, the Fed has raised interest rates aggressively, pushing them to a 5.25%-5.50% range by 2023. With inflation now slowing, attention turns to the upcoming economic data, including August’s employment and inflation reports, which will influence the Fed’s final decision on the size of the rate cut.
