Powell’s Jackson Hole Reset

From run hot to strict targeting as markets bet on September cuts

The quiet part is out: Powell just buried the 2020 framework.

Powell’s Jackson Hole speech didn’t just hint at a rate cut. It practically handed it over on a silver platter.

Yes, inflation is still running above target. But jobs are softening faster than expected, and the Fed is flinching.

The July labor print was ugly. Only 73,000 jobs added. May and June revised down by another 258,000.

Unemployment still shows 4.2%. On paper that looks fine. In reality, the real hit hasn’t landed yet. Severance packages from earlier cuts run out this fall. Budgets reset at the start of fiscal years. State unemployment funds are running low. Employers are already pulling back.

Powell called it a curious balance.

Inflation sits just under 3%. Target is 2%. No more talk of letting it “run hot.” No more makeup strategies. Powell said flat out they’re back to strict 2% targeting. At the same time, he’s opening the door to cuts.

That’s the contradiction. A tighter stance on inflation. Looser stance on jobs.

Cut rates, risk another wave of inflation. Hold steady, risk unemployment shooting higher. Either way, they lose.

Housing is showing cracks. Treasury auctions are struggling. Liquidity is thin. Rate cuts won’t fix that.

The Fed admitted the last framework helped fuel the 2021–23 inflation surge. Now they’re trying to claw back credibility while fighting fires on both sides of the mandate.

Cuts are coming. Credibility is already gone. And the real impact hasn’t hit yet.