Powell Ignored Elephant in Jackson Hole Lodge: Jonathan Levin

Federal Reserve Chair Jerome Powell on Friday removed all doubt that interest rate cuts are just around the corner. “The time has come for policy to adjust,” he said at his much-hyped annual speech in Jackson Hole, Wyoming, setting off a knee-jerk rally in stocks and bonds. Inflation risks have receded while labor market risks have increased, he added, and the central bank wouldn’t “seek or welcome further cooling in labor market conditions.” All of this points to a series of policy rate reductions in the coming quarters.

But before Powell even approached the podium, the market was expecting about ...