At the highly followed Jackson Hole conference, Fed Chairman Powell's speech brought new expectations to the market. His remarks suggested that if there are no unexpected improvements in employment and inflation data in the next month or two, the Fed may begin lowering interest rates in September. However, Powell did not commit to a long-term rate-cutting policy, which seems more like giving the market a green light rather than a signal to go full speed ahead.

Powell's speech highlighted several key points worth noting. First, he mentioned that the risk balance has shifted from inflation to employment, indicating that the Fed is now more focused on the stability of the job market. Secondly, he pointed out that the current policy interest rate is about 100 basis points above neutral levels, suggesting that the existing interest rate policy may be too tight. Finally, Powell emphasized that a balanced approach will be taken, focusing not only on inflation data but also considering the conditions of the job market.

These remarks had an immediate impact on the financial markets. Stock markets generally rose as investors felt optimistic about potential rate cuts. The dollar weakened due to the possibility of the U.S. interest rate advantage narrowing. At the same time, asset prices for gold and Bitcoin increased as the expectations of rate cuts lowered the cost of capital.

However, whether the Fed will really cut interest rates in September depends on three key factors: the August non-farm payroll data released on September 6, the August CPI data released on September 11, and the voting situation within the Fed. If the number of non-farm jobs in August is below 100,000, the likelihood of a rate cut will increase significantly. As long as core inflation does not rise sharply, the inflation data should not pose an obstacle to a rate cut. Finally, Powell also needs to coordinate with the few hawkish members within the Fed who oppose a rate cut.

Overall, Powell's speech seems to outline the future policy for the market. While no explicit commitments were made, it has indeed opened the door for potential interest rate cuts, increasing the market's expectations for the Fed to loosen monetary policy. The upcoming economic data will be crucial in determining the Fed's actions.