Bitcoin News Today: Powell's Policy Pivots Spark Crypto Surge and Market Reckoning

Markets reacted sharply on August 22 as Federal Reserve Chair Jerome Powell signaled potential rate cuts in response to evolving economic conditions. Delivered during the Jackson Hole Symposium, Powell’s speech outlined the Fed’s ongoing reassessment of its monetary policy framework and hinted at an accommodative stance amid shifting risks to inflation and employment. The comments spurred a broad market rally, with cryptocurrencies like ether and bitcoin surging to record highs, while investors recalibrated expectations for the central bank’s next moves.

Powell emphasized that the U.S. economy faces a delicate balance between inflationary and deflationary pressures. While inflation has eased from post-pandemic highs, it remains above the Fed’s 2% target. Core PCE inflation stood at 2.9% year-over-year in July, driven by rising goods prices and persistent services inflation. However, the Fed Chair noted that many of the upward price pressures from recent trade policy changes are likely to be short-lived. Tariff-driven inflation could accumulate over time, but Powell stressed that the central bank is prepared to manage any risks to price stability without repeating the inflationary missteps of the past.

The labor market, which has been a cornerstone of the Fed’s dual mandate, also came under scrutiny. Job growth has slowed sharply, averaging just 35,000 per month over the past three months, down from 168,000 in 2024. Despite a historically low unemployment rate of 4.2%, the Fed is monitoring signs of increasing downside risk. Powell pointed to a narrowing gap between labor supply and demand, fueled in part by a decline in immigration, which has softened the pressure on the labor market. These developments suggest a more fragile equilibrium in employment, prompting the central bank to consider a cautious approach to rate policy.

In terms of monetary policy, Powell indicated that the Fed is no longer adhering to a “preset course.” The current policy rate is 100 basis points closer to neutral compared to a year ago, and with inflation still elevated, the Fed is prepared to adjust its stance as needed. The Fed Chair noted that the restrictive policy environment, combined with the shifting balance of risks, may justify a rate cut. While no specific timing was provided, the suggestion of easing sparked a significant reaction in financial markets. Traders now price in over a 70% probability of a 25-basis-point cut at the September meeting, according to the CME FedWatch tool.

The revised Fed framework, part of a five-year review process, underscored the central bank’s commitment to flexibility. The updated Statement on Longer-Run Goals and Monetary Policy Strategy removes prior references to the effective lower bound and reiterates a return to flexible inflation targeting. The changes were driven by the realization that the 2020 “makeup strategy” was not aligned with the rapid inflation experienced in the post-pandemic recovery. Powell emphasized that maintaining well-anchored inflation expectations is crucial for both price stability and maximum employment, and the revised framework provides the Fed with the tools to act decisively in any economic climate.

The immediate impact of Powell’s remarks was evident in global markets, particularly in risk-sensitive assets. Ether (ETH) broke its 2021 record, surging to $4,885.00, while bitcoin (BTC) rose to $117,008.29. The crypto rally was fueled by a combination of dovish signals and broader institutional adoption, including regulatory advancements such as the GENIUS Act. Powell’s speech, however, did not provide a clear timeline for rate cuts, leaving room for continued market volatility as investors await further guidance.

Source: [1] Monetary Policy and the Fed's Framework Review (https://www.federalreserve.gov/newsevents/speech/powell20250822a.htm) [2] Watch Fed Chair Powell's full policy speech at Jackson Hole (https://www.cnbc.com/2025/08/22/watch-live-fed-chair-powell-delivers-key-policy-speech-at-jackson-hole.html) [3] Ether notches first new record since 2021 after Powell ... (https://www.cnbc.com/2025/08/22/crypto-market-today.html)