On Friday (August 22, 2025), Jerome Powell delivered a speech at Jackson Hole, Wyoming.  He said, “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”

With that one sentence, U.S. stock indexes soared higher to new record highs.  You know there is something wrong with our system when one bland statement from one person can dramatically impact the economy.

Mr. “Too Late” Powell (Trump’s nickname) was essentially saying that there is a good chance the Fed will lower its target rate at the September meeting.  The chances for a 25-basis point reduction went up to near certainty after these comments.

So, it looks like Trump is going to get what he wants this time out of “Too Late”, although maybe Trump would favor a much bigger cut.

The nickname isn’t a bad one, but it isn’t because he is too late lowering rates.  It is because he was too late in hiking rates and stopping the monetary inflation when price inflation was already spiking in 2022.

It wasn’t until March 2022 that the Fed finally hiked its target rate to a mere range of .25% to 0.50%.

And prior to that meeting in March 2022, the Fed was still increasing its balance sheet via monetary inflation, even when it was quite evident to most Americans that consumer prices were rising far faster than the Fed’s 2% target.

Now that Powell has indicated that the Fed will go back to lowering rates, perhaps he can answer some of these questions.

Questions for a Central Planner

If stocks continue to soar higher with new all-time highs, why is the Fed lowering interest rates?

There is a seemingly contradictory policy of lowering rates while continuing to deflate the balance sheet.  If the Fed is lowering rates, why is it also continuing to sell off debt from its balance sheet at the same time?

What will the Fed do if price inflation goes higher from here?  Will it start hiking rates again?  The PPI numbers recently came in showing a 0.9% rise in just one month.

What happened to the Fed’s policy of looking for an average of 2% price inflation over time?  We haven’t even been able to hit the 2% mark once in the last several years, so why is the Fed going to lower rates again?

What will the Fed do if we get some kind of stagflation where we have high price inflation and low (or negative) economic growth?  Which one will take priority?