Powell Puts September Rate Cut in Play; Bitcoin Pushes Higher

The Fed chair, perhaps surprisingly, took a dovish tone in his remarks at Jackson Hole.

• Fed Chair Jerome Powell opened the door to a September rate cut in remarks at Jackson Hole on Friday.
• “Downside risks to employment are rising,” said Powell.
• Under pressure for the past week, bitcoin rose sharply on the dovish tone.

Perhaps surprising markets which had expected a hawkish tone, Federal Reserve Chair Jerome Powell firmly put a September rate cut on the table on Friday.

Speaking at the Kansas City Fed’s Economic Symposium in Jackson Hole, Powell said the shifting balance of risks may warrant adjusting policy.

“Downside risks to employment are rising,” said Powell. “If those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

Bitcoin has gained about 2% since the remarks hit the wires, rising to $114,200. U.S. stocks have added more than 1% and the 10-year Treasury yield is lower by six basis points to 4.27%. The dollar index has dipped about 0.5% and gold is higher by 0.6%.

Rough week ahead of Powell

In anticipation that Powell would remain hawkish, risk markets — crypto among them — had been under sizable pressure in the days leading up to his address.

About a week ago, Bitcoin hit an all-time high above $124,000 as expectations of a September rate cut rose to nearly 100%. Since then, gold prices have fallen nearly 10% to $112,000 as expectations of monetary easing quickly fell to just 69% in the hours before Powell’s speech. Within minutes, expectations rose to nearly 90%, according to CME FedWatch data.