The highlight of this week is finally here: Jerome Powell’s speech at Jackson Hole. Markets are hoping he will provide insight into the Fed’s rate-cut trajectory over the next several months, especially since equities already appear to have priced in at least 50 basis points of cuts by year-end. But what if Powell does not give the market the satisfaction of confirming a September rate cut?

In many ways, the setup mirrors last year, though not entirely. This time last year, BLS revisions to the monthly jobs report showed aggressive downward adjustments, raising fears of a significant labor market downturn. Inflation also seemed to be on a path toward the Fed’s 2% target, only to reaccelerate, undermining progress.

Against this backdrop, Powell may choose a measured and balanced tone. He could highlight near-term inflation concerns tied to tariffs while acknowledging that the labor market, at a minimum, is decelerating. Yet, uncertainty remains around how immigration policy will affect the long-term labor market. A unique divergence may emerge: the unemployment rate stalling due to limited labor availability, while job creation slows as fewer immigrant workers are available to backfill vacant positions.

Either way, volatility remains low, economic data is still murky, and in just a few hours the market will reveal its verdict on the Fed’s policy trajectory.

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