Federal Reserve Chairman Jerome Powell took a more hawkish stance Friday morning during his Jackson Hole remarks, sending equities sliding. Crypto markets were mixed as traders continue to speculate what will happen at the next Fed policy meeting in September. 

While recent data, such as plunging unemployment numbers and the latest Consumer Price Index (CPI) report, may suggest that inflation is cooling, the central bank head warned that there is still a long way to go before sustained price stability is reached. 

“Estimates of longer-run neutral are not a place to pause or stop,” Powell said during his speech on the second day of the Economic Policy Symposium, hosted by the Kansas City Federal Reserve.

“Our decision at that September meeting will depend on the totality of the incoming data and the evolving outlook,” he said. 

Powell’s speech slightly swayed futures markets, which predicted a 54.5% chance of a 75 basis point rate hike in September immediately following the remarks, according to data from CME Group. In the days preceding the Jackson Hole meeting, the probability of a third consecutive 75 basis point increase sat at 58.5%. 

The S&P 500 slipped following the speech, losing 1%. The tech-heavy Nasdaq also lost, trading 1% lower at time of publication. Bitcoin and ether declined as well, losing 0.4% and 1%, respectively.

“Fed Chairman Powell’s comments sent an initial chill through the markets, with them selling off on the insistence that the central bank will keep hiking rates until he feels inflation is under control,” Josh Olszewicz, head of research at digital asset fund manager Valkyrie Investments, said.

“Powell’s admission that there will be pain before there is relief is rather hawkish, but both equities and crypto assets showed surprising resilience by rebounding rather quickly, which can be interpreted as evidence that the next rate hike is likely already priced in,” Olszewicz said.

Even as futures markets remained mixed, Olszewicz is betting markets will take a hawkish interpretation of Powell’s remarks. He predicts another 75 basis point rate hike in late September, which he expects markets will largely have already priced in. 

“[I] do not expect there to be a drastic effect on the markets should that come to pass, followed by successive rate hikes until inflation is reigned in and the unemployment rate returns to a healthier number,” Olszewicz said.

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