On Friday, Fed Chair Jerome Powell set the stage for what could be a pivotal month ahead. Speaking at the annual Jackson Hole symposium, Powell confirmed a significant shift in the Federal Reserve’s policy focus: rather than solely targeting 2% inflation, the Fed will now place equal weight on the state of the U.S. labour market when setting monetary policy.
This adjustment is a clear signal that interest rate cuts are on the horizon, with September now the likely moment for the Fed to act. For markets, this announcement carried immediate consequences. The Dollar weakened across the board as traders moved to price in a looser policy environment. GBP/USD rallied up to 1.35, while EUR/USD also pushed higher to 1.17, marking one of the more decisive moves we’ve seen in recent weeks.
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