August 24, 2025
You probably saw the stock market hit the first record high of the year on Friday. But why? What has investors and the market so excited? It’s something that you may be excited about too. This.
What? In English please.
Let me interpret Fed chair for you. What he just said is about as close as you’re ever going to get to the Federal Reserve chairman confirming that maybe the fed is ready to lower interest rates. And that hint that maybe the fed could possibly lower interest rates sent the markets soaring. That’s all it takes.
But why now? Tell me the truth – is it because of all of president trump’s threats?
Ok – so Fed chairman Jerome Powell spoke at the annual federal reserve conference on Friday. To be honest – it’s kind of a snooze fest. But as I just showed you – the market literally hangs on every single word he says. Besides the hint of a possible rate cut – Powell confirmed a lot of the stuff I’ve been reporting to you since trump took office. And this is where you should be paying attention.
Let’s start with tariffs. He said there is no doubt Trump’s tariffs are costing you. Not the foreign countries but you and u-s businesses. And the Fed chair says you need to brace yourself for those costs to keep going up.
So what he’s saying is –tariffs – once the president sets them — take time to work their way through the supply chain and find their way to your wallet. Chairman Powell says the best case scenario is that these tariffs are going to increase the costs we pay for goods and services — once…as he said a “one time shift in the price level.” But that’s not the only possible scenario. He said it’s also very possible that these tariffs could make prices go up — over and over sending inflation back up again. He said the fed just doesn’t know how to gauge it because trump keeps “evolving” or changing his tariff policy which is “prolonging the adjustment process.” Basically he says because trump keeps changing his mind about tariffs – the president is delaying the full price shock you’re going to see in your budget. But that doesn’t mean it’s not coming…and as Powell said – it also doesn’t mean it will hit “all at once.” Those price shocks may hit multiple times.
The other concern Powell raised was the risk to the labor market. Spoiler alert – he’s concerned about more layoffs and more people losing their jobs in the very near future.
Powell says for right now the labor market –at least on the surface — looks ok but when you look under the hood — there is an “unusual situation” happening. He says the data is showing there are fewer workers available – which he says is directly tied to President Trump’s immigration crack down – but there are also fewer jobs available – and that’s because of lots of things – like the uncertainty with the tariffs but also because the high interest rates are not allowing employers to borrow the money they need to hire more people.
So if there’s all this risk to the economy with people possibly losing their jobs and because inflation could possibly spike up again why would the fed even think about lowering rates? Well – the fed is really concerned about people being out of work. They don’t want to see that happen. For the record Powell said nothing about the president’s constant demands to lower rates and he has said he will never bend to anyone’s will including the president of the United States. He says the fed will decide monetary policy solely based on the data. And there’s a lot more data coming that the federal reserve board will have to review before they make an interest rate decision in mid-September.
Watch the Fed Chairman’s speech here.
