Powell prepares for final Jackson Hole address as Fed’s future and politics loom large
JACKSON HOLE, Wyo. — Federal Reserve Chair Jerome Powell is set to deliver his final remarks at the Fed’s annual Jackson Hole symposium on Friday, with investors keenly awaiting any hint of whether an interest rate cut could come as soon as September.
But Powell’s message is expected to go beyond the immediate question of rate policy. His speech will touch on deeper challenges that will shape the Fed’s direction long after his departure — and help define his legacy as chair.
Jackson Hole spotlight: Fed Governor Lisa Cook faces mounting criticism from former President Trump over two mortgage loans secured prior to her tenure at the central bank.
The annual gathering comes as debate intensifies over the health of the economy and the timing of potential rate cuts. Speaking to Yahoo Finance on Thursday, Kansas City Fed President Jeffrey Schmid and Cleveland Fed President Beth Hammack cautioned against expecting near-term reductions in borrowing costs.
“With the information we have right now, if the meeting were tomorrow, I wouldn’t see a case for cutting,” Hammack said, though she emphasized she remains open to new data ahead of September’s decision.
Still, several of Powell’s colleagues, including Michelle Bowman and Chris Waller, have leaned toward supporting a cut, and markets on Thursday were pricing in a roughly 75% chance of a quarter-point reduction at the Fed’s Sept. 17 meeting.
Political pressure intensifies
Powell’s appearance also comes against a charged political backdrop. Former President Trump this week called for Fed Governor Lisa Cook to resign over mortgage-related controversies, while the Financial Times reported the Justice Department urged Powell to remove her.
Trump has also continued his criticism of Powell, dubbing him “Too Late” for not lowering rates earlier and arguing the Fed should slash borrowing costs more aggressively. Treasury Secretary Scott Bessent has echoed that sentiment, suggesting a half-point cut should be considered.
Offering perspective: Federal Reserve Chair Jerome Powell, right, reviews cost figures alongside former President Donald Trump during a visit to the Fed in Washington on Thursday, July 24, 2025.
Powell, for his part, has repeatedly defended the importance of central bank independence. “As long as it serves the public well, it should continue and be respected,” he said last month.
Rethinking the Fed’s playbook
Beyond the immediate debate over interest rates, Powell is expected to outline revisions to the Fed’s monetary policy framework — its blueprint for balancing stable prices and maximum employment.
Among the most significant expected changes: scrapping the Fed’s pre-pandemic policy of “average inflation targeting.” That framework allowed inflation to run above 2% after periods of undershooting, with the aim of balancing out over time. After the inflation surge of recent years, the Fed is expected to return to a straightforward 2% target.
Powell previewed the shift in May, noting participants agreed it was time to reconsider language around shortfalls in inflation. The Fed first adopted a formal framework in 2012 and revisits it every five years. The last update in 2020 arguably contributed to the Fed’s delay in responding to inflation as it accelerated in 2021.
“The adoption of the 2020 framework was not the sole cause of the overshoot, but it played a role,” said Matt Luzzetti, chief U.S. economist at Deutsche Bank. He expects Powell’s speech to emphasize a more proactive policy stance and a balanced approach to inflation and employment risks.
James Fishback, CEO of hedge fund Azoria, went further, calling the strategy “a tragic mistake” that Powell must reckon with.
Looking ahead
Powell has also hinted that today’s economy is more vulnerable to supply shocks and volatile inflation than in the last decade, a reality the Fed’s new framework will need to acknowledge.
“The economic environment has changed significantly since 2020, and our review will reflect that,” Powell said earlier this year.
Investors will also be watching to see if the Fed adjusts its communication tools, particularly the quarterly Summary of Economic Projections and its closely watched “dot plot” of rate expectations.
Whatever Powell announces, the choices outlined at Jackson Hole will reverberate for years — shaping not only the Fed’s next moves but also the chair’s ultimate imprint on U.S. monetary history.