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Takeaways from Fed Chair Powell's speech at Jackson Hole
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell all but proclaimed victory in the fight against inflation and signaled that interest rate cuts are coming in a much-anticipated speech Friday in Jackson Hole, Wyoming.
Under Powell, the Fed raised its benchmark rate to the highest level in 23 years to subdue inflation that two years ago was running at the hottest pace in more than four decades. Inflation has come down steadily, and investors now expect the Fed to start cutting rates at its next meeting in September — an expectation that essentially got Powell’s endorsement Friday.
Declaring Victory
“My confidence has grown that inflation is on a sustainable path back to 2%,” Powell said in his keynote speech at the Fed’s annual economic conference in Jackson Hole.
He noted that inflation, according to the Fed’s preferred gauge, had fallen to 2.5% last from a peak of 7.1% two years ago. Measured by the better known consumer price index, inflation has dropped from a peak 9.1% in mid-2022 to 2.9% last month. Both are edging closer to the Fed’s 2% target.
Powell sounded confident that the Fed would achieve a so-called soft landing — containing inflation without causing a recession. “There is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market,’’ he said.
Higher rates contributed to progress against inflation, as did the easing of supply chain bottlenecks and worker shortages that caused shipping delays and higher prices as the economy bounded back with unexpected strength from COVID-19 lockdowns.
Signaling Rate Cuts
Powell suggested Friday that rate cuts are all but inevitable. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” he said.
Last year, the Fed had predicted that it would trim rates three times this year. But the cuts kept getting pushed back as the progress against inflation faltered early in 2024. Since then, the steady drop in inflation has resumed, giving the Fed more confidence that victory was in sight.
Abandoning the Good Ship “Transitory’’
Powell acknowledged that he and his Fed colleagues misjudged the inflationary threat when it emerged in early 2021. At the time, they expected the flareup of higher prices to be short-lived — the temporary consequence of pandemic-related supply chain disruptions. The pressure, they thought, would fade “fairly quickly without the need for a monetary policy response — in short, that the inflation would be transitory.’’
They weren’t alone in their optimism. “The good ship Transitory was a crowded one,’’ Powell said, ”with most mainstream analysts and advanced-economy central bankers on board.’’
But the word “transitory″ came back to haunt the Fed as inflation proved more intractable than expected. It spread from goods that were subject to supply chain backlogs into services, where it is harder to dislodge without raising rates and risking severe economic pain in the form of layoffs and higher unemployment. The Fed proceeded to raise rates 11 times in 2022 and 2023.
A Little Humility
Powell admitted that policymakers and economists have struggled to understand and respond to an economy that has been unpredictable since COVID-19 hit in early 2020. First, the pandemic shut down commerce and companies collectively slashed millions of jobs. Then the economy roared back with unexpected vigor, setting off inflationary pressures that been dormant since the early 1980s. When the Fed belated responded with aggressive rate hikes, economists predicted the hiring borrowing costs would cause a painful recession. But it didn’t.
“The limits of our knowledge — so clearly evident during the pandemic — demand humility and a questioning spirit focused on learnings lessons form the past and applying them flexibly to our current challenges,’’ Powell said.
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The U.S. has been cleared to use British bases for limited strikes on Iran’s missile capabilities after Prime Minister Keir Starmer signed off on the plan, and while U.K. Defense Secretary John Healey stated on Sunday Britain had “stepped up alongside the Americans.”
“The only way to stop the threat is to destroy the missiles at source, in their storage depots or the launchers which are used to fire the missiles,” Starmer confirmed in a recorded statement to the nation.
“The U.S. has requested permission to use British bases for that specific and limited defensive purpose,” he said. “We have taken the decision to accept this request.”
The decision came amid escalation across the Middle East in the wake of U.S. and Israeli strikes on Iran and Tehran’s retaliatory missile and drone attacks, raising fears of a broader regional conflict.
British Prime Minister Keir Starmer signed off on a plan to use British bases for limited strikes on Iranian missile capabilities. (Kin Cheung / POOL / AFP via Getty Images)
On Feb. 28, in the wake of Operation Epic Fury, Starmer confirmed British planes “are in the sky today” across the Middle East “as part of coordinated regional defensive operations to protect our people, our interests and our allies.”
Healey went on to disclose Sunday that two Iranian missiles were fired in the direction of Cyprus, where Britain maintains key sovereign base areas.
The Royal Air Force confirmed that Typhoon jets operating from Qatar as part of the joint U.K.-Qatar Typhoon Squadron successfully intercepted an Iranian drone heading toward Qatar.
About 300 British personnel are stationed at a naval facility in Bahrain, where Iranian missiles and drones struck nearby areas.
“We’re taking down the drones that are menacing either our bases, our people or our allies,” Healey told “Sunday Morning with Trevor Phillips” on Sky. “We’ve stepped up alongside the Americans. We’ve stepped up our defensive forces in the Middle East. We’re flying those sorties.”
ISRAEL’S LARGEST EVER MILITARY FLYOVER HAMMERS IRANIAN MILITARY TARGETS
British Defense Secretary John Healey stressed that the U.K. had “no part” in the American-Israeli strikes on Iran. (Peter Nicholls/Pool via Reuters)
Healey also made sure to stress that the U.K. had “no part” in the U.S. and Israeli strikes on Iran and insisted all British actions were defensive. “All our actions are about defending U.K. interests and defending U.K. allies,” he said.
When asked if the U.K. would join the U.S. in offensive action, Healey said, “I’m not going to speculate,” according to Sky News.
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Downing Street also confirmed Feb. 28 that Starmer and President Donald Trump had spoken by phone about the “situation in the Middle East,” the BBC reported.
Fox News Digital has reached out to Downing Street for comment.
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Army deployed and some areas in northern Gilgit-Baltistan region put under curfew after deadly violence over Khamenei’s killing.
Published On 2 Mar 2026
Pakistan has called in the military and imposed a three-day curfew in some areas following deadly protests over the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei in a joint United States-Israeli attack on Saturday.
At least 24 people were killed and dozens injured in clashes between protesters and security forces across the country on Sunday, prompting authorities to tighten security around the US embassy and consulates.
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The curfew was imposed before dawn Monday in the districts of Gilgit, Skurdu, and Shigar in the northern Gilgit-Baltistan region, where at least 12 protesters and one security officer were killed and dozens of others wounded during confrontations, according to an official statement.
Of those, seven were killed in Gilgit, a rescue official said, while six others died in Skardu, a doctor told AFP news agency on Monday.
Thousands of demonstrators on Sunday attacked the offices of the United Nations Military Observer Group in India and Pakistan (UNMOGIP), which monitors the ceasefire along the disputed Himalayan region of Kashmir, and the UN Development Programme in Skardu city.
Protesters also burned a police station and damaged a school and the offices of a local charity in Gilgit, according to officials.
UN spokesman Stephane Dujarric on Monday said protesters became violent near the UNMOGIP Field Station, which was vandalised.
“The safety and security of UN personnel and premises throughout the region remain our top priority, and we continue to closely monitor the situation,” Dujarric said.
Shabir Mir, a Gilgit-Baltistan government spokesman, said the situation was under control and that the curfew would remain in place until Wednesday. Police chief Akbar Nasir Khan urged residents to stay indoors, citing “deteriorating law and order conditions”.
In the southern port city of Karachi, the country’s commercial hub, 10 people were killed and more than 60 injured during a protest outside the US consulate.
Two additional protesters were killed in the capital, Islamabad, while heading towards the US embassy.
Pakistani authorities have beefed up security at US diplomatic missions across the country, including around the US consulate building in Peshawar, to avoid any further violence.
The US embassy and its consulates in Karachi and Lahore cancelled visa appointments and American Citizen Services on Monday, citing security concerns.
The federal government warned that the situation could further deteriorate amid large-scale demonstrations condemning Khamenei’s killing on Saturday.
Tehran has responded with a series of drone and missile attacks targeting Israel and US assets in several Gulf countries.
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