UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'A standard Powell speech'
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Aug 25, 2025 Federal Reserve Chair Powell's recent speech at Jackson Hole raised eyebrows, hinting at possible rate cuts to mitigate trade tax impacts. The discussion delves into the delicate balance of Fed independence amid political influences. Additionally, insights from business polls reveal shifting sentiments, highlighting the effect of political views on economic indicators. The decline in Japanese department store sales emphasizes the significance of domestic consumer trends in a rapidly evolving global landscape.
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Powell's Predictable Jackson Hole Message
- Jerome Powell's Jackson Hole speech followed his usual 'data-dependent' script without offering fresh policy direction.
- That conservatism left markets to read a possible September rate cut into routine rhetoric.
Markets Read A Potential September Cut
- Powell signalled a possible September rate cut as data showed damage from trade taxes on the US economy.
- Markets reacted positively, interpreting his tone as increasing the odds of easing.
Concern Over Fed's Political Vulnerability
- Donovan warns the speech lacked medium-term policy thinking amid structural economic change and a defence of Fed independence.
- He argues markets must consider the implications of a politicised central bank.