Bloomberg Surveillance Instant Reaction: Jay Powell's Jackson Hole Speech
Aug 22, 2025
In this discussion, Jim Bullard, a former St. Louis Fed President and current Chief Investment Strategist at Purdue University, and Rich Clarida, former Fed Vice Chair and PIMCO Global Economic Advisor, delve into the implications of Jay Powell's Jackson Hole speech. They dissect the possibility of an interest rate cut and its connection to labor market risks. The conversation highlights challenges around managing a dual economy and the intricate relationship between inflation, tariffs, and monetary policy, offering keen insights for investors.
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September Cut Door Opened
- Jay Powell's remarks opened a clear path to a September 25bp cut by citing labor market risks and a moderately restrictive policy stance.
- Markets quickly priced a near-term cut, pushing equities higher and front-end yields lower.
Purdue's AI Requirement Example
- Jim Bullard described requiring an AI course at Purdue's Daniels School for every student to emphasize the technology's importance.
- He views AI as a general-purpose technology that can materially boost productivity if it diffuses broadly.
Committee Center Of Gravity Shift
- Powell spoke for the committee's center of gravity, reflecting a shift toward cautious easing as labor data softened.
- Several officials may misgive, but the committee's balance appears tilted toward modest rate reductions.