How Jerome Powell’s speech will affect the cryptocurrency market
Federal Reserve Chairman Jerome Powell will deliver a keynote speech this Friday at the annual Jackson Hole Economic Conference. His report, titled “Overview of the Economic Prospects and Framework,” should help shape the Fed’s next steps on interest rates.
Market experts have identified three main directions Powell could take, each of which could have significant consequences.
Scenario 1: «Peaceful» signal
Powell could signal a rate cut is coming. The Chicago Mercantile Exchange’s FedWatch tool showed futures markets pricing a 79,2% chance of a rate cut in September. A «dovish» tone would mean the Fed is concerned about the slowing labor market and is willing to act.
Scenario 2: «Hawk’s Warning»
Alternatively, Powell could cool market expectations by focusing on renewed inflation pressures. President Donald Trump’s recent tariffs have raised concerns about a new wave of inflation that could delay the Fed.
Scenario 3: Data-dependent neutral path
The third option is for Powell to remain neutral, making no commitments. UBS economists suggest he could simply emphasize the Fed’s reliance on data, deferring a final decision until the FOMC meeting on Sept. 17.
The outcome of Powell’s speech will have an impact on the crypto market. A «soft» signal of lower borrowing costs will ease financial conditions, stimulating the inflow of funds into risky assets such as Bitcoin and ether. However, the hawkish focus on inflation may limit liquidity and provoke a new wave of volatility.
