WORLD NEWS FOR MONTENEGRO DIASPORA
Choose language:
AUTHOR: M.J. GDNUS
Federal Reserve Chairman Jerome Powell hinted today that interest rates in the U.S. could be cut as early as September, telling central bankers at the annual symposium in Jackson Hole that a slowing labor market along with still-elevated inflation requires a more balanced approach. This pushed down the dollar, lowered the price of gold, and enabled a sharp rise in stocks and bitcoin.
Today's symposium will not be remembered as the day the Fed cut rates, but as the day Powell finally formalized that possibility. By shifting the conversation from "if" to "when," he weakened the dollar, cooled down gold, lifted stocks, and sent bitcoin nearly to a new high. This time, the message wasn't in the policy itself, but in the expectations — in the market conditions where the Fed can move a lot even by merely announcing a move it intends to make later.
At the Fed’s annual gathering in the mountains of Wyoming, Powell did not change interest rates, but with a few carefully chosen phrases, he altered the balance of expectations — enough to reverse the direction of currency exchange rates, commodity prices, stocks, and cryptocurrencies on an August Friday afternoon.
The Fed chair’s sentence sounded deceptively familiar: policy remains "data-dependent," but the emphasis was new. Inflation is no longer the only preoccupation; the labor market, once indestructible, now shows signs of weakness, so the Fed is no longer fighting just price pressures but weighing them against the risk of slowdown. In that compromise lies the space for a rate cut that could come as early as September.
Powell didn’t give in to political noise. U.S. President Donald Trump has long called for major rate cuts, portraying the Fed as a barrier to growth. Powell’s speech, delivered in his usual monotone, was intended to show independence, but the message was not neutral. By acknowledging weakening employment data alongside still-high prices, he quietly shifted the Fed’s stance. It wasn’t a promise, but it was a pivot — and markets heard it immediately.
Yields on Treasury bonds fell after Powell’s remarks — and so did the dollar. The logic is simple: if rate cuts are likely, the premium for holding U.S. assets declines.
Gold, which typically gains in value when the dollar weakens, went the other way today. Spot gold prices fell 0.3%, to around $3,330 per ounce — likely explained by timing. Investors had already been buying gold in recent days expecting a bold pivot toward lower rates, but when Powell signaled caution, prices pulled back.
Stocks, on the other hand, saw gains. The S&P 500 index rose by 1.6%, small-cap stocks by 3.6%, and the construction sector by more than 4%. Credit-sensitive sectors like real estate priced in cheaper borrowing before it actually happened. For equity markets, Powell’s caution was enough.
Bitcoin recorded the biggest increase — 4%, to around $116,500. In the world of cryptocurrencies, nuance often matters less than liquidity, so even a hint of a rate-cutting policy was enough to boost not only digital assets but also the sectors connected to them.
The Fed hasn’t changed policy — only the tone — leaving everything uncertain when it comes to whether September will actually bring a rate cut. That decision depends on data arriving over the next twenty days or so, including reports on inflation, unemployment, and consumer spending. If those reports confirm weakness, Powell will take action. Otherwise, this moment will be remembered as a strategic pause, not the beginning of an easing cycle.
