Exclusive: What the experts think about Powell’s new comments on Fed interest rate cuts

Here’s the quiz you really want.

Federal Reserve Chair Jerome Powell’s keynote address at the Jackson Hole Economic Symposium was:

“Dovish.”
“Data-dependent.”
“Independent.”
All of the above.

See below for multiple clues plus white-hot advice from market experts.

Federal Reserve Chair Jerome Powell, right, and Andrew Bailey, governor of the Bank of England (BOE) met in Jackson Hole to discuss monetary policy.

Bloomber/Getty Images

Powell strikes balance between inflation, jobs

Powell’s comments sent stocks soaring on expectations that the central bank will consider a cut in the benchmark interest rate next month:

Powell stopped short of committing to any immediate policy shift, stressing that monetary policy is not on a fixed path.
Instead, he said decisions will be made solely based on evolving economic data and its implications on the Federal Reserve’s dual mandate from Congress to balance inflation and jobs.
Powell warned that President Donald Trump’s tariffs are beginning to affect consumer prices, with higher costs likely to continue.
Powell also reaffirmed the Fed’s independence, saying decisions remain grounded in data, not politics.

‘We're going to get some cuts!’

John Luke Tyner, head of fixed income at Aptus Capital Advisors, said Powell has accepted the market's argument that the labor market is weakening and that it is a larger threat to the economy than tariff-related inflation.

“Once you open the door like this it’s near impossible to walk it back,” Tyner said. “We're going to get some cuts! Data-dependent comments likely reference more to 2026 and beyond as I expect the Fed will give the market what it wants (two to maybe three cuts) in the back half of this year.

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“From here if you think the Fed is ahead of the curve in terms of acting prior to the labor market deteriorating, this ‘Powell Pivot 3.0 (or whatever the number is)’ is likely bullish for risk assets (and lower bond yields),’’ Tyner said.

Adding “If you think the Fed is late to the party and reacting to bad data that is about to get worse, typically rate cuts in the face of economic deterioration hasn't historically been a good thing.”

‘This was the ‘Waller was right’ speech’

Brian Mulberry, senior portfolio manager at Zacks Investment Management, noted that Powell’s stance seemed more aligned with that of Fed Governor Christopher Waller, who dissented from the Federal Open Market Committee's “wait-and-see” approach to holding rates steady last month.

Waller and Fed Governor Michelle Bowman both said weakening labor market data indicated it was time for a .25% cut. It was the first dissent on the FOMC in nearly 30 years.

“My first reaction is that this was the ‘Waller was right’ speech,’’ Mulberry said. “The tone was decidedly dovish and the market reaction reflects exactly that. Powell addressed the weakness in the labor market and acknowledged inflationary pressures from tariffs have not shown to be long lasting.’’

Those were the two most important topics that markets wanted to hear, Mulberry said.

“Not only did he speak to them, he did so with a lot of detail and responded with the need for the FOMC to adapt to shifting risks that would require lower policy rates,” Mulberry added.

‘The Fed will remain independent’

Eric Diton, president and managing director of The Wealth Alliance, said that Powell signaled interest rate cuts “may be warranted given the weakness in the labor market, but re-emphasized that the Fed is data-dependent.

“He described the labor market as ‘unusual,’ with simultaneous slowdowns in both the supply and demand of labor. He noted that the inflationary impact of tariffs are still working their way through the economy, making monetary decisions more complex,” Diton said.

Powell “clarified that Fed policy decisions will be based solely on the economy. The Fed will remain independent and not succumb to any political pressures,’’ Diton said.

‘Struck a more dovish tone than markets anticipated’

Michael Sanders, head of fixed income at Madison Investments, said that the Fed chair “struck a more dovish tone than markets anticipated, sparking a rally in risk assets and a modest steepening of the yield curve.’’

More Federal Reserve:

“The emphasis on labor market weakness shows the Fed is prioritizing employment concerns over the risks of inflation. Powell’s confidence that a wage-price spiral won’t emerge has reinforced a commitment to cutting rates in September,” Sanders said, adding that whether it is a .25% or .50% cut will depend on incoming August inflation and jobs data expected before the Sept. 17 FOMC meeting.

“The markets, on the other hand, appear less sure of the inflation outlook, given the lack of movement in long rates to go along with a rally in front-end rates,” Sanders said.

“We continue to see the intermediate part of the curve as more compelling than cash, offering high yields and better return potential without taking on the uncertainty of long-duration bonds.”