Bloomberg Surveillance Markets Cautious Ahead of Jackson Hole
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Aug 21, 2025 Michael McKee, International Economics & Policy correspondent from Bloomberg News, reports live from Jackson Hole. He discusses the cautious mindset of traders ahead of Fed Chair Jerome Powell’s pivotal speech on interest rates. The podcast reveals increasing tensions as President Trump pressures Fed Governor Lisa Cook to resign, potentially reshaping the Board of Governors. Amidst a volatile market, McKee provides insights into the implications of these developments on monetary policy and investor sentiment.
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Inflation Dominates Fed Focus
- The Fed minutes show most FOMC members prioritized fighting inflation over labor-market concerns.
- That emphasis could make Powell signal less support for an imminent rate cut at Jackson Hole.
Markets Priced For One Small Cut
- Markets currently price an ~80% chance of a single 25bp Fed cut, not a 50bp move.
- Minutes and incoming inflation signals could prompt markets to scale back those cut expectations.
Board Turnover Won't Immediately Change Policy
- Removing governors wouldn't instantly change policy because Fed culture and dissenting presidents resist capture.
- Wall Street pushback and entrenched inflation concerns limit how far political pressure can reshape the Fed.