Powell Signals an Interest Rate Cut

On August 22, 2025, the Federal Reserve held the annual Jackson Hole Symposium; there, the chair Jerome Powell gave a significant signal that the FED may consider lowering the interest rates in the upcoming months to be in line with economic indicators and changes. Despite not mentioning a specific timeline, this signal meant acknowledging the improvements in the national economy, such as an eased job market with a decreased level of unemployment. Yet, still, the remarks of Powell demonstrate an understanding that the FED will not stop acting cautiously in the following months while deciding on the rates and will make decisions based on the inflationary trends, unemployment levels, and other important economic markers, understood from Powell’s words, “The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.”

This warmer approach to decreased interest rates marks a slight shift from Powell’s persisting resistance against the demands of President Trump. For many months now, especially since when Trump became the president, Powell and Trump have been having a conflict on the levels of the interest rate.

On one hand, Trump desired the rates to be lowered in order to enhance and increase market activity. He has continuously mentioned that the inflation is negligible and a cut in the rates would lower the government’s interest payments on its $37 trillion in debt.

On the other hand, Powell was defending that the status quo was not allowing such an approach due to the country’s inflationary trajectory. Increasing interest rates is a common tactic to combat high inflation—used to halt economic activity and move money into bank vaults—and this directly conflicted with Trump’s perspective.

Since many nations follow the FED's lead, interest rates have traditionally been one of the FED's most powerful tools for influencing the overall economic situation, first in the US and later globally. As a result of this critical impact that these declarations and changes hold, the markets have gone through some major peaks. Türkiye was no different from the rest either. NASDAQ, BIST100, the cryptocurrencies, gold, and silver were all included in the list of impacted. The signals are profoundly valuable in trading because investors usually hope to find a currency or a share before others do, usually depending on expectations rather than actualities. Thus, only a shifted tone in Powell’s speech was enough to encourage investors.

Jerome Powell’s words represent a balance, both an openness towards a future of lowered interest rates and also a firm commitment to FED’s decision-making process of acting according to time-specific economic assessments.

Edited by: Ömer Gökce