At the conclusion of the Jackson Hole, Wyoming, FED meeting, Chairman Powell indicated that FED policy was changing. 
Recent FED History
The Federal Reserve Act of 1977 modified the original act that established the Federal Reserve in 1913. The new policy gave the FED a “Dual Mandate” so they would no longer be tasked with just keeping inflation low but would simultaneously try to maintain “maximum employment”. Of course, these are sort of mutually exclusive. If the FED pumps a lot of liquidity into the market, unemployment goes down, but simultaneously inflation goes up, and vice versa if the FED gets too restrictive. So, the FED tried to walk a tightrope between the two extremes and set an inflation target of 2%.
After a decade of low inflation (primarily due to cheap imports from China and the after-effects of the 2008 crash), the FED changed its policy goals again in 2020, to not just balance jobs and inflation but to actually prioritize Job creation over low inflation. But almost simultaneously COVID shutdown almost everything, and Unemployment skyrocketed. So, the FED created massive inflation to stimulate the economy and reduce unemployment. And Powell called the resulting inflation “transitory”.
Eventually, the FED was forced to see the reality of the situation that they had created, and they were forced to raise rates. In the following chart, we can see how the U.S. FED compares to the Bank of England (BOE) and the European Central Bank (ECB).
As we can see, the ECB actually had negative rates from 2020 to 2021.
Raising Rates
From September 2022 through June 2023, the ECB raised rates 11 times. The BOE raised rates 10 times from December 2021 through August 2023, and the FED raised rates 10 times from March 2022 through July 2023.
Lowering Rates
The ECB began cutting rates in June of 2024 and has had a total of 8 cuts from June 2024 through June 2025 and the BOE has had 5 rate cuts in 2024 and 2025. During this period, the FED held rates at 5.33% from August 2023 through August 2024. And then, just prior to the election, the FED began cutting rates. September 2024 – 5.13%, October 2024 – 4.83%, November 2024 – 4.64% and December 2024 – 4.48%.
Throughout most of 2025, the President (and the markets) have been calling for the FED to follow Europe and cut rates. But the FED has feared the inflationary impact of Trump’s tariffs, so Powell has refused to lower rates and held rates at 4.33%, while the ECB is at 2% (which is why Trump is saying Powell is “too late”).
August Jackson Hole Changes
In his speech at the conclusion of the Jackson Hole Summit, FED Chairman Jerome Powell announced a major policy change and hinted at a rate cut in September.
Remember in 2020, Congress told the FED to prioritize jobs over inflation. However, contrary to Congress, throughout 2024 and 2025, Powell’s fear of inflation has led him to prioritize fighting inflation over creating jobs.
Powell’s major policy announcement was that the FED would no longer target 2% inflation. Many pundits believe that the new target will be somewhere around 3% (which is where we are now) or possibly even 4%. Additionally, Powell said that from here on out, the FED will be targeting maximum employment rather than inflation (which could kick inflation up from current levels).
The Market’s Response
The major markets liked the news. The DJIA closed up 1.89% on the day. NASDAQ was up 1.88%, the S&P 500 (which includes a lot more laggards) was only up 1.52%, and the Russell 2000 (which includes 2000 “small cap” stocks) was up a whopping 3.86% after Powell’s announcement.
Bitcoin hit a low of $111,649 on Friday morning, and then a couple of hours later (after Powell’s speech) it had risen to $117,312. or a 5.07% gain. Ethereum bottomed at $4,204 and rose to $4,849 a few hours later. This is a 15.3% gain, taking ETH to new all-time highs.
On this hourly ETH chart based on Coinbase trades data, we can see ETH rocketing from around $4,300 to over $4,800 in 3 hourly candles.
The chart above was created using TradingView. I really enjoy their powerful charting tools and real-time market data. You can open a free account with TradingView to create your own charts.
“Coinbase is the largest Crypto Trading platform in the U.S. and the easiest to use”. ~Tim McMahon, editor
Other good news for Ethereum may have also helped boost its price, as rumors from Europe are that a “Digital Euro” may launch on either Ethereum or Solana rather than creating its own “Central Bank Digital Currency” (CBDC). See: The Potentially Devastating Differences Between CBDCs and Stablecoins.
Also, our ETH-ROC chart issued a Buy Signal back in May, and since then, institutional ETH demand has skyrocketed. Roughly 10 public companies now hold about 2.3% of the ETH supply. Family offices in Asia are allocating up to 5% crypto, Peter Thiel is betting big on Ethereum, and on Thursday, August 21, alone, Ethereum ETFs pulled in $287 million in inflows. And a longtime BTC holder (Whale) switched $75 million into ETH.
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