What made Powell’s Jackson Hole pivot even more striking is how sharply it contrasted with the FOMC minutes released just 48 hours earlier. Those minutes revealed a Fed still dominated by inflation fears. A majority of participants judged the upside risk to inflation greater than the downside risk to employment, with tariffs flagged as a slow-burn inflationary driver that could keep prices elevated well beyond initial expectations.
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Officials highlighted that:
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• Rates “may not be far above neutral”—the level of interest that neither stimulates nor restrains the economy—implying the Fed has little cushion left to lean against inflation without tipping growth into contraction.
• Most members expected tariff costs to flow through to consumers, with only modest absorption by foreign exporters.
• Several participants warned of asset valuations already “at the upper end of historical ranges,” suggesting financial instability risks were on the radar.
• Concerns were raised that inflation expectations could “become unanchored” if tariff effects persisted.
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In short, the minutes framed inflation as the bigger threat and downplayed employment weakness. Powell, just days later, flipped the emphasis—acknowledging that downside risks to jobs are rising, inflation risks remain, but the “balance of risks” justified opening the door to cuts.

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