US Federal Reserve (Fed) Chair Jerome Powell said that they will adopt a new policy framework of flexible inflation targeting and eliminate the ‘makeup’ strategy for inflation, while delivering a speech on ‘Economic Outlook and Framework Review’ at the annual Jackson Hole Economic Symposium.
- Gold Prices Rise for Third Day Amid Fed Rate Cut Expectations
- Fed Will Keep Trump Waiting Amid a Wave of Global Rate Cuts
- Gold Fields boosts dividend as profit triples on record bullion prices
- Silver Price Today: XAG/USD Slips After Gains, Trading Near $38
- Gold price prediction today: What’s the gold rate outlook for August 22, 2025
President Donald Trump has once again criticized Federal Reserve Chair Jerome Powell ahead of Powell’s upcoming speech at the Fed’s annual conference in Jackson Hole. Trump’s remarks come amid pressure to cut interest rates to boost the housing market and address inflation concerns. This tension between the President and the Fed highlights the complexities of monetary policy decisions and their impact on the economy.
Powell speech & Event Key
- “Framework calls for balanced approach when central bank’s goals in tension.”
- “Prior framework’s emphasis on overly specific set of economic conditions may have led to some confusion.”
- Trump’s criticism of Powell centers on the negative effects of current interest rates on the housing industry, calling for a significant rate cut despite the Fed’s cautious approach to maintaining rates to control inflation.
- Mortgage rates have remained high, impacting housing affordability and sales, with expectations about future Fed policies influencing market conditions.
- Trump’s demands for rate cuts have been met with resistance from the Fed, which has been monitoring inflation indicators and employment data to determine the necessity of a rate adjustment.
- Mixed inflation data and economic indicators have complicated the decision-making process for the Fed, with upcoming reports on Personal Consumption Expenditures likely to influence the next rate move.
- Powell’s upcoming speech at Jackson Hole will provide insights into how the Fed navigates the conflicting signals of higher inflation and shifting employment figures, shaping the direction of future rate decisions and economic policies.
How could Powell’s speech at Jackson Hole affect the US Dollar?
Although markets widely anticipate a rate cut at the Fed’s next policy meeting, they seem unsure about whether the US central bank will go for two or three cuts this year. According to the CME FedWatch Tool, there is a 33% probability of a total of 75 bps reduction in rates in 2025, against a 47% probability of 50.
In case Powell emphasizes worsening labor market conditions and adopts a cautious tone on the growth outlook, the USD could come under selling pressure with the immediate reaction. On the flip side, the USD could gather strength against its rivals if Powell downplays the disappointing employment data and reiterates that they need more time to assess the impact of tariffs on inflation before easing the policy in a steady way.
Chair Powell will communicate the Fed’s lean towards easing in September at Jackson Hole and explain:
“Although there is still more data to come, we believe Powell will suggest that economic conditions support policy recalibration. Downside risks to the labor market have grown, while tariff passthrough into inflation appears slower and more manageable than previously expected.”
“The Relative Strength Index (RSI) indicator on the daily chart moves sideways near 50 and the US Dollar (USD) Index fluctuates in a tight range at around the 20-day and the 50-day Simple Moving Averages (SMAs), reflecting a neutral stance in the near term.
“On the upside, the 100-day SMA aligns as a key resistance level at 99.00 ahead of 99.60-100.00 (Fibonacci 23.6% retracement of the January-July downtrend, psychological level) and 101.55 (Fibonacci 38.2% retracement). Looking south, support levels could be spotted at 97.50 (static level), 96.45 (end-point of the downtrend) and 95.50 (mid-point of the descending regression channel).”