Jackson Hole Symposium 2025: Fed Chair Speech Drives Markets | 19-25/8/2025

Last week marked a busy week for many large economies on the data front. That included the United States’ latest data releases, especially inflation data, which has intensified the unclarity regarding the future of US monetary policy. This builds even greater anticipation for the Jackson Hole symposium and the Federal Reserve Chair’s speech scheduled for Friday. This week will also witness the release of the minutes from the US Federal Reserve’s July meeting.

European data, however, showed a significant slowdown in the growth rates for the second quarter of the year, with some major economies like Germany and Italy witnessing some economic regression, while Spain recorded strong growth.

As for Asia, the picture looked unclear. The Japanese economy recorded visible continued growth, supported by rising exports and investments. Whereas inflationary challenges continued to pressure the Bank of Japan’s policymakers. On the other hand, major Chinese data releases signaled a weakening economy, such as industrial production and retail sales, amidst an ongoing crisis in the property sector. These readings fueled doubts in the market on whether the Chinese economy can continue to grow within a turbulent global environment.

Key points:

●    All eyes are on Friday’s Jackson Hole symposium and the Fed Chair’s speech.
●    The EU economy slows down during the second quarter of 2025, compared to the previous quarter. 
●    The Japanese economy beats expectations and records economic growth, supported by rising investments and demand.
●    The Swiss National Bank meets to discuss interest rates.

Jackson Hole Symposium 2025 and US Inflation Drive Financial Markets

First, the US economy

The week was packed with important US economic data releases, with US inflation data at the forefront. Inflation readings came out mixed; the Consumer Price Index (CPI) slowed, while the Producer Price Index (PPI) rose. These contradictory results led to people having mixed expectations in the market. While some got optimistic about a possible interest rate cut, others still believe the Fed has reasons to keep rates untouched.  

The year-over-year CPI remained unchanged at 2.7%, while the monthly CPI fell briefly. As for the PPI, the yearly reading rose again to a 4-month high at 3.4%.

Optimism for a possible rate cut increased after the release of the retail sales data, which showed a lower reading on both a monthly and an annual basis, signaling a higher chance of a rate cut this coming September.

On the trade policy front, President Donald Trump indicated new incoming tariffs on steel and semiconductor chips.

This week, everyone is anticipating one of the Fed’s most significant annual meetings: the Jackson Hole symposium. Jackson Hole follows a week packed with important economic data releases, including ambiguous CPI and PPI readings. The meeting is scheduled to take place this Friday after an uneventful week on the economic data front.

Second, the European economy

Last Thursday, the Eurostat reported a seasonally adjusted Growth Domestic Product (GDP) of 0.1% in the Eurozone for the second quarter of this year, unchanged from the preliminary reading. While the European Union’s economy grew by 0.2%, showcasing a significant slowdown compared to the first quarter that recorded growth rates of 0.6% and 0.5% for the Eurozone and the EU, respectively. This decline in growth is believed to be due to the effects of tariffs imposed during the previous quarter.

While the Eurozone’s first and third largest economies regressed by 0.1%, Spain led the contentment with a 0.7% growth rate due to increased demand and capital influx, followed by Portugal and France by minimal margins.

As for the regression in the German front, it's due to a weakened appetite for investment, especially in construction and capital goods, while Italy suffered from subdued consumption and slower industrial activity.

Industrial production in the Eurozone declined 1.3% in June, reflecting decreases in capital and non-durable consumer goods, adding to concerns about the European economy.

Goldman Sachs, however, indicated that the EU economy is still in good health, despite constantly lagging behind compared to the US economy. Which is largely due to the unclarity from the American end, leaving investors unsure of their holdings.

The bank raised its economic growth projections for the Eurozone to 1.2% for the year 2027, starting this year. While it adjusted its projections for the United States downward to 1.7% for the same period.

China, on the other hand, remains a challenge for European production within the continent. Shifting from a major exporter to a rival to local economies.

Switzerland unexpectedly reported improving economic results, with its economy growing in the second quarter—prior to the latest 39% tariffs imposed as of late. The Swiss economy grew y 0.1%, when it was anticipated to slow down by the same rate. Analysts explain this growth with exporters flocking towards the States before the latest tariff updates.

Pascal Donohoe, Chair of the Eurogroup, indicated that significant decisions regarding the proposed digital euro design are expected in September. These remarks follow calls from the European Central Bank (ECB) President Christine Lagarde to strengthen the euro’s global role and explore its potential as a practical alternative to the US dollar.

Third, the Japanese economy

The Japanese economy showed strong signs of economic improvement, with the Cabinet Office stating that the annual GDP grew by 1% in Q2 ending in June, marking the country’s fifth consecutive quarterly growth.

The Office stated that this growth was likely due to export diversity, international demand growth, improved private equity, and capital investment.

However, Japan still struggles with inflation, leaving policymakers unsure on whether to raise interest rates or not. US Treasury Secretary Scott Bessent recently urged Japan to raise interest rates, noting that Japan still lags behind major central banks.

Japan’s core national CPI data for July will be released this week and are expected to fall below 3.3% to 3%, still above the 2% target, maintaining pressure on the Bank of Japan regarding interest rate adjustments amid US tariffs.

Fourth, the Chinese economy

Two of the major economic indicators slowed during China’s July readings, fueling further local and international concerns for the world’s second-largest economy.

Industrial production grew by 5.7% in July, the slowest pace since November last year, while Chinese retail sales fell to 3.7%, down from 4.8% in June.

All the while, China continues to struggle to revive its property market, with new home prices in 70 major cities falling by 0.3%, following a series of declines aimed at stimulating domestic demand and balancing economic activity across sectors. These measures were part of a larger initiative to combat production stimulus and economic activity concentration in certain sectors in order to encourage investments within all sectors of the Chinese economy.

The property sector’s 12% fall during the first 7 months of this year shows its stubborn resistance to the Chinese government’s efforts to revive confidence in the sector, which constitutes a third of the country’s economy.  

Such readings re-emphasize the fact that the Chinese economy is still facing ongoing challenges due to unclear US tariff policies, despite freezing them for another 90 days last week.

Oxford Economics warned that China’s economy may see growth halved by the 2050s, driven by persistent property sector problems and an aging population, which could negatively impact productivity.

financial market: Economic calendar