On August 22, 2025, Federal Reserve Chair Jerome Powell announced the end of the flexible inflation targeting framework established in 2020 at the Jackson Hole symposium.
Change in Inflation Policy Approach
The Federal Reserve has abandoned its **flexible average inflation targeting framework**, indicating a significant **shift in policy approaches to manage inflation**. Jerome Powell announced this at the Jackson Hole symposium, emphasizing the **U.S. economy's resilience** as a justification for revising monetary policy.
Market Reactions
Post-announcement, the stock market experienced **rallies in major indices** reflecting investor optimism. Historically, such policy shifts have influenced the **crypto market**, increasing volatility in assets like Bitcoin and Ethereum due to **rate adjustments**.
Impact on Cryptocurrencies
This shift in policy will influence **financial markets** and potentially alter asset allocations in cryptocurrency investments. Experts view this as a step towards tighter interest rate management, affecting BTC, ETH, and DeFi. **Stablecoins** may experience liquidity changes as interest rates fluctuate.
Potential changes may lead to **increased market volatility** and shifts in investor strategies regarding cryptocurrencies. Historical data indicates that adjustments may follow similar past Federal Reserve policy changes.
