Bloomberg Businessweek Instant Reaction: Jay Powell's Jackson Hole Speech
4 snips
Aug 22, 2025 Jim Bullard, former President of the St. Louis Fed and current Purdue University expert, teams up with Kate Moore, Chief Investment Officer at Citi Wealth, to unpack the implications of Jay Powell's recent speech. They discuss the potential for an interest rate cut amidst labor market concerns, the K-shaped recovery's uneven growth, and how technology is reshaping productivity. The conversation also touches on the complex dynamics within the Federal Reserve and the broader market reactions to these insights.
AI Snips
Chapters
Transcript
Episode notes
Powell Opens Door To A September Cut
- Jay Powell used his Jackson Hole remarks to solidify market expectations for a 25 bp cut in September.
- Jim Bullard judged the speech as leaning toward a September cut while leaving later meetings uncertain.
Labor Market Softening Justifies Caution
- Bullard argued the labor market is slowing and policy is moderately restrictive, allowing modest rate cuts while still exerting downward pressure on inflation.
- He suggested the policy rate may be about 125 bp above neutral and that gradual easing could be appropriate.
Credibility Risk From Yield Moves
- Bullard warned that short-term easing could raise long-term yields if markets lose confidence, harming Fed credibility.
- He emphasized careful communication to avoid rapid adverse market reactions.