Federal Reserve Chair Jerome Powell just sent shockwaves through global markets with remarks that signal a major shift in the Fed’s stance. Speaking earlier today, Powell warned that employment is now showing signs of weakness, hinting that the central bank may need to pivot sooner than expected.
> “The situation shows that employment is facing risks of weakening… Stable inflation expectations cannot be taken lightly,” Powell stated, while also announcing the Fed would abandon its flexible average inflation targeting framework—a policy cornerstone since 2020.
This marks a dramatic turn in the Fed’s priorities. After years of battling inflation, the balance of risks is shifting toward protecting the labor market. That message was enough to ignite speculation across Wall Street and beyond.
📉 Traders React Fast
Markets immediately priced in a more aggressive Fed pivot. Odds of a September rate cut surged to 90%, up from 75% just before Powell’s remarks. Lower interest rates would mean cheaper borrowing costs, stronger liquidity, and potentially renewed risk-on appetite across financial markets.
🚀 Crypto Takes Flight
Bitcoin ($BTC) and Ethereum ($ETH) were quick to respond, spiking as traders cheered the prospect of easier monetary policy. For digital assets, which thrive in liquidity-rich environments, Powell’s pivot is being seen as the green light for another potential bull run. Social feeds lit up with traders declaring, “To the moonnnnnn!”
💡 The Big Picture
Powell’s speech is more than a routine policy update—it could mark the beginning of a new market cycle. If rate cuts arrive in September, it would be the clearest signal yet that the Fed is done tightening and ready to prioritize growth again. For equities, bonds, and especially crypto, that shift could unleash a powerful wave of risk-taking.
For now, one thing is certain: Powell’s pivot has put September on the map, and traders are bracing for liftoff.
