Jerome Powell Faces Inflation, Politics and Legacy at His Final Jackson Hole

The annual Jackson Hole Economic Symposium in Wyoming has long been a stage where Federal Reserve chairs signal the direction of U.S. monetary policy. This year’s gathering carries unusual weight. It will be Jerome Powell’s final appearance as Fed chair, arriving at a moment of mounting economic strain and intensifying political attacks. With his tenure ending in May, Powell faces not only pressure clarify the short-term direction of interest rates, but also a high-stakes struggle to defend the Fed’s independence from the White House.

At last year’s Jackson Hole, Powell calmed a jittery Wall Street by signaling that the Fed would begin cutting rates as inflation cooled and the labor market remained strong. This year, the outlook is far less reassuring and the data far murkier.

Powell has built his reputation on consensus and data-driven decisions, but the numbers he relies on now point in opposite directions: Inflation remains stuck above the Fed’s 2 percent target and has crept higher in recent months. At the same time, job growth is slowing more sharply than expected.

Cracks are also emerging inside the Fed. Minutes from the July meeting show two Fed governors voting against the central bank’s decision to hold rates steady—the first so called “dual dissent” in three decades. Most members on the Fed’s board, like Powell, worried that cutting too soon could reignite inflation. But as Powell’s tenure winds down, his ability to maintain unity is being tested.

As if confusing data and internal disagreements weren’t enough, Powell is also facing political pressure unmatched by any previous Fed chair primarily from the U.S. President.

For months, Trump has blasted Powell’s approach to inflation and urged him to cut rates. Trump’s escalating attacks now threaten not only Powell’s personal legacy, but also the long-term credibility and stability of the institution itself. He has already begun reshaping the Fed by filling board vacancies with loyalists, raising fears that the next chair could be far more pliant to political pressure. The President has even undermined the very data the Fed depends on, ousting the labor statistics commissioner Erika McEntarfer after July’s dismal jobs report rattled markets.

For Powell, the stage at Jackson Hole offers no shortage of perilous options. He could hint at impending rate cuts and send markets soaring. He could double down on holding rates steady to curb inflation—risking deeper recession fears. Or, true to form, he could remain deliberately vague, falling back on his tried-and-true wait-and-see approach.

His legacy is already complicated. Powell guided the Fed through the pandemic, kept unemployment low longer than many thought possible, and presided over one of the most volatile economic periods in U.S. history. Yet critics, including the President, argue he was too slow to act on inflation in 2021 and too quick to pivot in 2024.

Powell is set to address the symposium’s audience tomorrow morning. How he handles the speech is anyone’s guess, though markets are betting he’ll hint at rate cuts in September. What is clear is that Powell now faces a collection of challenges with profound implications—for the stability of the economy and for his own place in history. And Powell’s remarks may matter less for what they signal about the next rate move than for how they defend the Fed itself, an institution long insulated from politics.