At the annual Jackson Hole Symposium held on August 22, 2025, Federal Reserve Chair Jerome Powell delivered a speech that has sent ripples through global financial markets, triggering a significant rally in cryptocurrencies and igniting debates across economic and political circles. Powell’s remarks, which underscored flexibility and caution in the face of mounting economic uncertainties, have been widely interpreted as a signal that the central bank may soon cut interest rates—a prospect that has emboldened investors and reshaped expectations for the U.S. economy.
According to FXStreet, the immediate aftermath of Powell’s speech saw a dramatic surge in risk assets, particularly in the cryptocurrency sector. Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, broke through critical resistance levels, with the ETH/BTC trading pair moving above an eight-year barrier for the first time since 2017. Within just 24 hours, Ethereum’s price soared to $4,837, inching ever closer to its 2021 all-time high of $4,878. This move was accompanied by a 7% jump in the ETH/BTC ratio, reflecting growing investor confidence in Ethereum’s potential to outperform Bitcoin in the current environment.
The bullish sentiment was not limited to Ethereum. Cardano (ADA), another major cryptocurrency, confirmed a positive price trajectory, buoyed by broader market optimism, increased regulatory clarity, and ongoing network integration. As reported by Ainvest, Cardano’s steady gains positioned it as a key beneficiary of the expanding crypto bull market, even as Bitcoin experienced a period of correction. The overall cryptocurrency market capitalization surged past $4.07 trillion, underscoring the scale of the rally unleashed by Powell’s dovish tone.
But what exactly did Powell say to prompt such a strong reaction? In his address, Powell outlined the core dilemma facing the Federal Reserve: the dual mandate of price stability and full employment is being tested by opposing forces. Inflation, as measured by the Consumer Price Index, has fallen from 3% in January 2025 to 2.7% in July, a decline that President Donald Trump has highlighted in his calls for lower interest rates. However, Powell cautioned that higher tariffs are already pushing up prices in some goods categories, and the Producer Price Index rose by 3.3% in July, suggesting that some of the costs from tariffs are beginning to be passed on to consumers.
Powell’s speech, as covered by Barchart, focused on a new set of policy-driven shocks that are reshaping the U.S. economic outlook. He warned of “substantial uncertainty” stemming from “significantly higher tariffs” and “an abrupt slowdown in labor force growth” due to tighter immigration policies. These changes, Powell argued, are not just cyclical blips but may represent more structural shifts in the economy, making it harder for the Fed to distinguish between temporary fluctuations and lasting changes. “Monetary policy can do little to alter structural changes,” Powell noted, emphasizing the limits of the Fed’s toolkit in the face of such headwinds.
The labor market, once a pillar of post-pandemic recovery, has shown signs of softening. Over the past three months, payroll growth averaged just 35,000 per month—down sharply from 168,000 per month during 2024. Unemployment has edged up to 4.2%, still historically low, but other indicators such as quits, layoffs, and nominal wage growth have also softened. Powell directly linked the slowdown in labor-force growth to a sharp falloff in immigration, with participation rates slipping in recent months. Real GDP growth has also decelerated, slowing to an annualized pace of 1.2% in the first half of 2025, compared to 2.5% in 2024. Consumer spending, once robust, has cooled, further complicating the Fed’s calculus.
On inflation, Powell presented a nuanced picture. He cited estimates showing total Personal Consumption Expenditures (PCE) inflation at 2.6% year-over-year in July, with core PCE at 2.9%. While housing services inflation continues to cool, nonhousing services inflation remains “somewhat too firm for comfort.” Powell’s baseline scenario is that the effects of tariffs could amount to a one-time price level shift, rather than igniting a renewed inflation spiral. However, he acknowledged that the timing and magnitude of these pass-throughs remain uncertain, and the evolving tariff schedules could still pose risks to inflation expectations.
In a significant policy shift, Powell confirmed that the Fed has abandoned its flexible average inflation targeting (FAIT) strategy, adopted in August 2020. The FAIT approach allowed for periods of above-target inflation to make up for earlier shortfalls, but it has been criticized for contributing to the surge in inflation that peaked at 9.1% in 2022. The Fed has now reverted to a more traditional flexible inflation targeting framework, aiming to anchor inflation and expectations at the 2% target. Powell described this updated approach as “robust across a wider range of conditions,” with public reviews scheduled about every five years.
Technical analysts, as reported by Yellow, identified a bull flag formation on Ethereum’s 4-hour USD chart, pointing to potential price targets between $5,400 and $5,477. If this pattern is confirmed, Ethereum could soon surpass its historical peak, further fueling bullish sentiment in the crypto space. These technical signals, combined with Powell’s emphasis on flexibility and data dependency, have created what some analysts are calling the start of a new business cycle for cryptocurrencies and risk assets more broadly.
Yet, uncertainty looms over the Fed’s future direction. As the White House, led by President Trump, nominates new Fed members who share its economic agenda—including a preference for lower rates—the central bank’s approach may shift further. Powell’s “swan-song” speech, delivered less than a year before his expected departure in May 2026, leaves open questions about how the next generation of Fed leadership will navigate the delicate balance between price stability and full employment. As Atlantic Council senior fellow Hung Tran noted, “How will the emerging Fed, increasingly populated by members who share the president’s economic agenda—and which will have a new chair after May 2026—execute the Fed’s dual mandate of pursuing price stability and full employment? That will have more impact on financial markets and the economy than Powell’s swan-song speech.”
For now, Powell’s message out of Wyoming is one of cautious pragmatism. The Fed sees clear, policy-linked forces—tariffs and immigration—reshaping the inflation-employment trade-off, and it is tweaking its playbook to better navigate an economy where shocks may be more frequent and persistent. Until the data clarify whether these shocks are a blip or a new baseline, Powell signaled the central bank will move carefully, protect the hard-won anchoring of inflation expectations, and avoid policies that would needlessly imperil jobs. The financial world will be watching closely as the Fed’s next moves unfold, with cryptocurrencies and traditional markets alike bracing for what comes next.
