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August 22, 2025 • 18 mins

In a speech at the annual Jackson Hole Economic Policy Symposium, Fed Chair Jerome Powell left the door open for a possible interest rate cut in September, sending a positive signal to Wall Street that pushed markets higher.

This comes at a unique moment for the US Central Bank, which is under fire for how its handled rate decisions, threats to fire a sitting governor and a public inquiry into its building renovations.

On today’s Big Take podcast, Bloomberg’s Amara Omeokwe joins host Saleha Mohsin from Jackson Hole to discuss how central bankers and economic policy leaders are navigating the tensions between the White House and the Federal Reserve — and what we learned from Jay Powell’s last speech at Jackson Hole as chairman.

Listen more: Odd Lots: Lots More on What Just Happened With the Fed at Jackson Hole (Podcast)

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Episode Transcript

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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News. At the Federal Reserve's
Annual Economic Policy Conference in Jackson Hole, Wyoming, on Friday,
Federal Reserve Chair Jerome Powell left the door open for
a possible rate cut in September, and.

Speaker 2 (00:19):
The stability of the unemployment rate and other labor market
measures allows us to proceed carefully as we consider changes
to our policy stance. Nonetheless, with policy and restrictive territory,
the baseline outlook and the shifting balance of risks may
warrant adjusting our policy stance.

Speaker 1 (00:38):
His remarks sent a positive signal to Wall Street. The
response is rip roaring in markets, with equities surging, guilds plunging.
But we're not as warmly received by President Trump. He's
been putting pressure on the Fed to lower interest rates
for months. He spoke from the Oval Office on Friday afternoon. Well,
when we call him too late for a reason, you

(00:58):
should have got him a year ago.

Speaker 3 (01:00):
He's too late.

Speaker 1 (01:01):
Amara Amochway covers the Federal Reserve and the US economy
for Bloomberg News.

Speaker 4 (01:05):
The big takeaway is that he opened the door for
the first time this year to a rate cut, and
this was the key phrase in this speech quote, the
shifting balance of risks may warrant adjusting our policy stance.

Speaker 1 (01:19):
She's been tracking the unique moment the US Central Bank
finds itself in. It's under increasing criticism from the Trump
administration for Howard's handled rate decisions, a threat from the
President to fire a sitting FED governor if she doesn't resign,
the early departure of another governor on the board, and
the end of Powell's chair term in May.

Speaker 3 (01:39):
And it's been an unpreceded pressure campaign from the Trump
administration and his allies on Chair pal and the FED
for lower interest rates. We've heard Chejury Secretary Scott Besen
also talking about the fact that the Fed is behind
the curve, and so it really has been an all
out assault. And we've seen the criticisms kind of then

(02:00):
beyond interest rate policy to then also scrutinizing this two
point five billion dollar renovation that the FED is doing
of its headquarters. Now we have Bill Poulte, who is
the head of the FHFA, accusing one of the FED
governors of mortgage fraud and calling on her to resign
because of it. So we're just seeing Trump and people
around him put pressure on the Fed from sort of

(02:22):
any angle that they can find.

Speaker 1 (02:28):
I'm Saleamosen and this is the big take from Bloomberg News.

Speaker 4 (02:32):
Today.

Speaker 1 (02:32):
On the show, we head to the Jackson Hole Economic
Policy Symposium in Wyoming to learn what FED Chair j
Powell said about the possibility of a rate cut in
September and any hint about his future in the midst
of escalating tensions between the Trump administration and the Federal Reserve.

(02:53):
This year's Jackson Hole Economic Policy Symposium comes at a
significant time. For months, the Trump administs stration has been
putting pressure on Federal Reserve Chair Jerom Powell to cut
interest rates, and the next rate decision will come in
about a month in mid September. Here's my colleague amar Amokway,
who covers the Federal Reserve for Bloomberg.

Speaker 3 (03:14):
The Fed has not cut interest rates this entire year,
after cutting interest rates three times at the end of
twenty twenty four. And the reason that Chair Powell and
other Fed officials up until now have been hesitant to
do rate cuts is because they are on guard for
the potential for President Donald Trump's tariffs to stoke inflation. So,

(03:35):
of course, the Fed has two responsibilities to foster maximum
employment and to keep inflation stable. And so right now
those two goals are a little bit intention because if
tariffs are going to drive inflation, that would suggest not
doing rate cuts, But if the labor market is weakening,
that would suggest that they should be cutting rates.

Speaker 1 (03:55):
Now we know that Powell is leaving the door open
to a possible rate cut. He asked a Mare to
react to what she heard in Powell's speech.

Speaker 4 (04:03):
He didn't say definitively that officials will cut at their
next meeting in September, but his remarks signaled that the
option is on the table. And there he was talking
about the fact that, in his view, and as he
also talked about in the speech, downside risks to employment
are rising. And this was a notable shift for Powle
because as recently as last month he had a more

(04:26):
optimistic tone about the labor market, but on Friday he
sounded more cautious. He referenced the week jobs report we
got earlier this month, and he cautioned that if risks
in the labor market materialized, it could lead to higher
layoffs and higher unemployment. At the same time, though Powell
continued to argue that policymakers must guard against the prospect

(04:46):
that President Donald Trump's tariffs will lead to persistent inflation.
He said the effects of tariffs on consumer prices are
now clearly visible, but it's reasonable to expect that the
effects will be relatively short lived. Said that it's possible
that tariffs could bring more lasting inflation than that policy
makers need to assess and manage that risk. Paul also

(05:08):
said that the combination of the possibility for inflation to
rise and for the labor market to weekend puts the
Fed's policy calculations and a challenging situation. So while he
did open the door to rate cuts, it was still
a message that was carefully hedged.

Speaker 1 (05:23):
Before we dig into how the Fed will make its
decision in September. I wanted a merit a talk us
through how we got to this point where Powell is
under so much pressure.

Speaker 3 (05:33):
The President has been pushing for lower interest rates for
a couple of reasons. One, he kind of pushes back
against this idea that his tariffs will cause inflation to rise.
So he's pushing against that idea because obviously tariffs are
a centerpiece of his economic agenda. Then he's also saying
that the FED holding interest rates at the level where

(05:54):
they are now is driving up borrowing costs for the
US government. And obviously, the President has has talked a
lot about closing the US deficit, bringing down US brawing costs,
and so in a way, he wants the FED to
assist him in reaching that goal. And so what we've
seen from President Trump is constant, constant, constant pressure on

(06:14):
Chair pal for a lower.

Speaker 1 (06:15):
Rates, and that includes Trump at least talking about ruminating
about firing J. Powell. What's the likelihood of that at
this point.

Speaker 3 (06:23):
Well, you know, this is something, as you've reported on,
that goes back to his first term, where he has
constantly flirted with the idea of firing Powell. He seems
to have backed off that idea and is instead focusing
sort of on this pressure campaign. And I think that's
in part because from a legal perspective, it would be
very difficult to remove him. The law that governs the

(06:43):
Federal Reserve says that if FED governor can only be
removed for cause, which is a very high legal standard.
The law is a little bit more ambiguous on whether
the chair can or cannot be removed for cause, but
the Supreme Court has also come out this year and
kind of did an initial ruling that signaled that they
would sort of insulate the FED chair and FED governor's

(07:04):
really from removal from their positions by the president. So
from a legal standpoint, it seems like it would be
very difficult for President Trump to remove chair pal and
we've seen him sort of back off from the idea
as well.

Speaker 1 (07:17):
As Trump is backed off that idea, he's called for
the resignation of one member of the Board of Governors,
Lisa Cook, threatening on Friday to fire her if she
doesn't resign. Trump shared that with reporters as Powell was speaking.

Speaker 2 (07:34):
Her if she doesn't resign case what she did was abandoned.

Speaker 4 (07:39):
Of course, either a firing or a resignation from Cook
would give the President an opportunity to name someone of
his choosing to fill her slot on the Fed's board
and likely push for the lower rates that President Trump wants.
But earlier this week Cook said in a statement that
she would not be bullied into stepping down. And there
are also lots of legal questions and doubts that a

(08:01):
president can easily fire a FED governor because of the
law that governs the FED.

Speaker 1 (08:07):
I asked Amara about how this evolving situation around FED
Governor Lisa Cook changed the conversations heading into Jackson Hole
and might have informed what we heard from Powell.

Speaker 3 (08:17):
Well, if we were going to be talking about central
bank independence, the FEDS and dependents on monetary policy and
the pressure campaign that the Trump administration has applied on
Powell and the FED this year before these latest allegations
on Lisa Cook came out, now we're definitely going to
be talking about that here right Like this has just

(08:38):
made it so crystal clear that this is what the
FED is facing. This is the greatest challenge that the
FED is facing, along with this interest rate decision that
it has to make. But you know, this is just
such a huge, huge moment for the FED at a
time of transition for the FED. Right we had another

(08:59):
governor resigned earlier than expected, and President Trump is expected
to put one of his allies into that seat. Chairpal's
term is expiring next May, so this board could begin
to look very different, and the next chair could be
someone who is very different. And so for the current

(09:21):
people on the FED, protecting the Fed's independents, pushing back
against this pressure campaign from the President and his allies
and saying, look, we're not going to lower rates because
the President tells us so, or because he's scrutinizing our
construction project or scrutinizing our mortgages. We're going to make
interest rate decisions based on what we see in the

(09:43):
economy and what we see in the data. Because if
they shown any sign of making their decisions for any
other reason, that then opens up a potential can of
worms where markets, investors, the public can no longer potentially
trust that the FED will get inflation under control when

(10:05):
we have an inflation problem, that the FED is making
its decisions based on their best judgments and not because
of political pressure.

Speaker 1 (10:14):
So that's the pressure facing the Federal Reserve. We dig
into how they do make decisions after the break. Speaking
from the Grand Teton National Park in Wyoming on Friday,
Powell very clearly telegraphed the importance of FED independence and

(10:35):
the Central banks reliance on trusted data.

Speaker 2 (10:38):
FOMC members will make these decisions based solely on their
assessment of the data and its implications for the economic
outlook and the balance of risks. We will never deviate
from that approach.

Speaker 1 (10:52):
And Meryl. Let's dig a little bit deeper into the
question of the data that's driving decisions at the Federal Reserve.
Powell's critics, including Trump who Powell too late Jay, say
that he's been behind the curve of inflation, waiting on
data that turned out to need huge revisions Later on,
we saw over the summer that Trump fired the head

(11:12):
of the Bureau of Labor Statistics and the wave of
those revisions. How much validity is there? The criticism of
how the Fed relies on data and which data it uses.

Speaker 3 (11:23):
BLS data is constantly rovitsed, right, So the fact that
we had revisions is not abnormal. The magnitude of the
revisions this time was abnormal. So I think it is
fair for people to say, Okay, what is going on
with the data? Why are the revisions so notable? But
as we've been talking about, this is a labor market

(11:44):
that's in transition. There are a lot of changes happening,
and some of those because of President Trump's policies, like
his immigration crackdown, like his efforts to reduce the size
of the federal government, and also the BLS itself has
talked about having fewer resources and therefore maybe some of
the methods that they use not being as robust as

(12:05):
they were in the past. So you know, all of
those things are happening, and so that's the backdrop. I
think that the FED has been pretty consistent though in
explaining how it thinks about data and how it uses
that data, right, and so Chair Power and the others
have always talked about looking at the official government numbers

(12:26):
that come out on inflation and the labor market, but
also relying on what they're hearing from businesses and people
when they're out in the economy. The reason why the
FED is in such a difficult position right now is
because the data is changing, but they're not all changing
in the same direction, right, So the labor market is

(12:48):
pointing in one direction and the inflation data is pointing
in a different direction, and so then that makes it
hard for them to judge what the right move is
based on the data.

Speaker 1 (12:58):
And where does this lead us in terms of credibility
for the FED and credibility of the data that's used
to make these data dependent decisions.

Speaker 3 (13:08):
I think that is a challenge for the FED right
because you have these questions about the data coming alongside
questions about the Fed's credibility that are being constantly raised
by the President and his allies, right, So I think
that's why you are seeing FED officials be so sort
of dug into their position that they're going to ignore

(13:30):
the political noise, right because I think one thing economists
always tell me is that the way you preserve your
credibility is being able to make a coherent argument. And
so I think that is what FED officials are going
to try to do. Even if there are questions about
the data, They're going to say, look, this is the
best data that we have. We're combining that data with

(13:51):
other sources of information, whether that be anecdotal data, data
from private sources, and we're making the best decisions that
we can based on what we see in front of.

Speaker 1 (14:00):
Us amor the world is watching as the sanctity of
the FED and I'm talking about that, it's independence from
political meddling is being tested. Are you hearing about officials
from other central banks like Eureuprasia talking about what diminished
FED independence might mean for them?

Speaker 3 (14:17):
Yes, we are, And I think, like when cher Powell
has been in forums and settings with other international central bankers,
you really do hear them kind of coming to his
defense and also applauding him for trying to stay.

Speaker 1 (14:34):
Above the political fray.

Speaker 3 (14:35):
I mean he hasn't, I mean he hasn't been able
to stay out of it, but kind of when he's
asked about Trump and all the insults that Trump labs
his way, you know, just saying we're sticking to our nitting,
you know. So, I think central bankers from around the
world really respect j. Powell and really respect how how
he has managed a very tricky situation. And I think

(14:57):
central bankers understand that because the US economy is really
the bell Weather economy for the entire globe, and everything
that happens with our assets, the dollar treasuries matter for
global markets. I think that they encourage Powell because they
know that his ability to be steadfast matters for their

(15:18):
ability to do their jobs and their economies back in
their home nations. And so I think that's why you
do see a lot of support for Chair Powell on
the international stage.

Speaker 1 (15:28):
So in his first term, Trump nominated Powell as chair,
and then Powell was again nominated to the chairmanship by Biden.
That term ends in May. How do you think folks
are reflecting on Powell's time as Chair as he gives
his speech, what are some of the defining aspects of

(15:48):
his legacy?

Speaker 3 (15:50):
So two big things, and the first one is kind
of different sides of the same point. Right, Chair Pal
has faced a lot in his term as Chair. Right,
he had the worst inflation surge in decades as we
came out of the pandemic. And one defining sort of
moment of his tenure Edge Chair is that the FED

(16:12):
got that inflation wrong. The FED and others many others
thought that the inflation would be transitory, and so they
didn't begin to hike rates until we had an inflation
problem on our hands. And I think people will remember
that transitory was wrong.

Speaker 4 (16:31):
Right.

Speaker 3 (16:32):
But then at the same time, Chairpal has been given
a lot of credit for recognizing that we had an
inflation problem and then leading the FED to aggressively raise
interest rates to counter it. And at the time when
they began hiking rates, the fear was that those rate
hikes would really constrict the economy and cause a recession.
And so far, you know, we have not gotten that.

(16:55):
We have seen inflation come down, notably it is approaching
the Fed's two target, and we have seen the labor
market over these years, for the most part, hold up
pretty well. We didn't have a painful recession, and so
I think Chair Powell will also be remembered for acknowledging

(17:16):
the initial mistake, but then really crafting a response that
brought inflation down without inflicting widespread economic pain.

Speaker 1 (17:31):
This is the Big Take from Bloomberg News. I'm Salamosen.
If you're enjoying our coverage of the Federal Reserve in
Jackson Hole, you should check out our sister show, Odd Lots,
who are in Wyoming to cover the symposium. The Big
Take is hosted by Me, David Gora, Aan Ha and
Sarah Holder. The show is made by Aaron Edwards, David Fox,
Eleanor Harrison Dengate, Patti hirsh Rachel Lewis, Kriskey, Naomi and

(17:55):
Julia Press, Tracy Samuelson, Naomi Shaven, Alex Sugia, Julia Wa,
Yang Yang, and take Yasuzawa. To get more from The
Big Take and unlimited access to all of Bloomberg dot Com,
subscribe today at Bloomberg dot Com Slash Podcast Offer. Thanks
for listening. We'll be back on Monday.
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Hosts And Creators

Sarah Holder

Sarah Holder

Saleha Mohsin

Saleha Mohsin

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