Powell’s Dovish Speech Pushes Rate Cut Odds to 89%

August 22, 2025 – Federal Reserve Chair Jerome Powell struck a surprisingly dovish tone at the Jackson Hole Economic Symposium. His remarks shifted the market narrative and sparked rallies in equities, gold, and cryptocurrencies. The speech, delivered at 10:00 a.m. ET, focused on balancing stubborn inflation with a weakening labor market.

Powell admitted inflation risks remain tilted upward, with core CPI at 3.1% versus the Fed’s 2% target. Still, he placed greater weight on employment risks. Job creation has slowed to about +35,000 monthly, while declining immigration adds pressure. “Employment risks have increased, and conditions may warrant adjusting our policy stance,” Powell said. Analysts read this as a signal for upcoming rate cuts.

He also dismissed tariff-driven price pressures as “temporary.” Powell stressed the Fed’s independence from politics, a clear message during election-year tensions. His comments marked a pivot from fighting inflation at all costs to protecting growth and jobs. Markets priced in the shift immediately.

Market Impact: BTC, ETH, and Risk Assets Rally

The dovish shift sparked a relief rally across asset classes.

• Bitcoin (BTC), trading near $112,000 ahead of the speech on hawkish fears, jumped to around $114,000 within minutes, up 1–2%. ETF inflows picked up as the dollar weakened and equities surged.
• Ethereum (ETH) followed suit, climbing off its $4,000 base, buoyed by risk-on sentiment and expectations of easier liquidity.
• Gold rose 1%, and the S&P 500 hit fresh records, underscoring broader market relief.

Crypto traders saw Powell’s pivot as validation that digital assets could benefit from looser financial conditions heading into Q4.

Rate Cut Odds Rise Sharply

Futures markets recalibrated immediately after the speech.

Meeting Month	Pre-Speech Probability of Cut	Post-Speech Probability
September 2025	~70% for 25bp cut	~89%, fully priced in
October 2025	~40%	~55%
December 2025	~30%	~50%

The dovish language increased the total expected easing by 57 basis points through year-end, compared with under 50bp before Jackson Hole. Traders now see a September cut as “very likely,” with the chance of a 50bp surprise still on the table if August jobs data deteriorates further.

Why It Matters for Crypto

For digital assets, Powell dovish tilt removes a key headwind. Bitcoin and Ethereum thrive in environments of cheap money and abundant liquidity, and today’s speech boosted both near-term sentiment and longer-term expectations for institutional inflows.

Analysts suggest BTC could retest its $120,000 highs, while ETH eyes $4,500 resistance, if September brings the first of three expected cuts.