Odd Lots Podcast Summary

Episode: Lots More on What Just Happened With the Fed at Jackson Hole
Date: August 22, 2025
Hosts: Tracy Alloway, Dashiell Bennett
Guest: Mike McKee (Bloomberg TV)

Overview

This episode of Odd Lots provides an in-depth discussion of the latest U.S. Federal Reserve meeting at Jackson Hole, focusing on Jay Powell’s final speech as Chair. The hosts and guest analyze the surprising policy direction signaled by Powell, changes in the Fed’s policy framework, the global central banking context, and implications for future monetary policy and leadership. The episode features insightful commentary on Fed communications, tariffs, and the broader significance of Jackson Hole within global finance circles.

Key Discussion Points and Insights

1. The Surprise from Powell’s Speech

• Powell Opens the Door to Rate Cut: Contrary to most analysts’ expectations, Powell’s speech suggested openness to a rate cut, despite pending economic data that could still shift the outlook.

  “I was wrong. As were the majority of analysts who thought that Jay Powell would want to leave his options open for September... it was a bit of a surprise that he basically opened the door to a rate cut because now it’s really hard to close that door.”
  —Mike McKee [02:35]

• Changing Tone Among Fed Officials: Recent conversations with Fed members suggested a more hawkish stance had developed prior to the speech.

  “A lot of the people from the Fed that you’ve been talking to over the past couple of days, they sounded more hawkish than they did perhaps like just three or four weeks ago.”
  —Tracy Alloway [03:35]

2. The Fed’s Policy Framework: A Shift in Narrative

• From 2020 Framework to Pragmatism: The Fed’s 2020 framework was quickly abandoned as inflation surged.

  “They came up with this new framework in 2020 that didn’t work. And a year into it… Jay Powell said, ‘well, we’ve junked the framework because we’ve got inflation.’”
  —Mike McKee [05:29]

• Lesson Learned: The new policy approach is less reliant on fixed frameworks, recognizing the unpredictability of economic conditions.

  “We admit that we can’t steer the economy in quite as precise a way as we thought we could because the underlying conditions... can change faster than we anticipated.”
  —Mike McKee [06:34]

3. Jackson Hole’s True Character & Importance

• Atmosphere Inside the Conference: While media attention is intense, the event itself is mostly academic and not focused on actionable policy debate.

  “It’s rather quite boring unless you’re an academic economist... It’s not a meeting where people come in and go, okay, here’s unemployment and here’s prices and what do we do at the next meeting.”
  —Mike McKee [07:33]

• Why Jackson Hole Matters: The chair’s address has become the market’s August “reference point,” a tradition intensified since the 2008 financial crisis.

  “Then he announced basically that they were going to do QE for the first time at this meeting... And so that’s really focused a lot of attention on it, which then feeds on itself because it becomes important.”
  —Mike McKee [09:13]

4. Complexity and Communication of Fed Policy

• Evolving Complexity: Fed communications have become much longer and more complex since 2009, though recent efforts aim to simplify statements for clarity.

  “Starting from 2009, they exploded in both length and complexity… Then they became like 2,000 words. And you needed a college degree at a minimum to fully understand them.”
  —Tracy Alloway [10:18] “They’ve cut them back significantly… Now they’re just kind of saying, here’s one paragraph on where the economy is and a paragraph that says, here’s what we’re doing about it.”
  —Mike McKee [12:05]

5. Global Central Banking Context

• Different Regions, Different Pressures: All major central banks are grappling with the aftermath of the pandemic and, significantly, with U.S. fiscal and trade policies.

  “The Fed is always first among equals... But the biggest thing at the moment is that they’re all wrestling with Trump fiscal policy... the fiscal policy has different impacts on different countries.”
  —Mike McKee [13:01]

6. Tariffs and Inflation: One-Off or Persistent Risk?

• Ongoing Debate: There’s disagreement among economists about whether new U.S. tariffs will cause ongoing inflation or a single spike.

  “There has been division... The chairman seemed to decide it’s still going to be a one-time increase sector by sector… but it’s not going to be an ongoing process of each sector seeing prices rise.”
  —Mike McKee [14:04]

• Political Dynamics: Persistent political will for tariffs could make protectionism a lasting (and inflationary) feature.

  “Maybe the answer is that tariffs are a one off in terms of the inflationary impulse, but that the underlying political impulse... is going to be this new permanent feature...”
  —Dashiell Bennett [15:28]

7. Speculation on the Next Fed Chair

• Leadership Watch: With Powell exiting, the group speculates on who might be next, with Chris Waller’s odds seen as having improved after Powell’s speech.

  “You could argue that the speech today improved Waller’s chances if you were looking at it from a Las Vegas point of view in terms of odds.”
  —Mike McKee [16:21]

• Waller’s Character: Waller is described as an institutionalist unlikely to bend to political interference.

  “He’s somebody who follows what the Fed has done in the past. And I don’t think he would give in to the President’s desire to do something that would hurt the Fed...”
  —Mike McKee [17:36]

Notable Quotes & Memorable Moments

• On Fed Policy Surprises:

  “It was a bit of a surprise that he basically opened the door to a rate cut because now it’s really hard to close that door.”
  —Mike McKee [02:35]

• On the Atmosphere at Jackson Hole:

  “Inside it’s an academic conference... almost never a headline inside because nobody says anything that would move markets or interest people really.”
  —Mike McKee [07:33]

• On Trade Policy Complexity:

  “Each one [tariff] affects another because so much of this stuff is intermediate goods that are used to price something else. So it gets very complicated.”
  —Mike McKee [14:04]

• On Potential New Fed Chair:

  “I don’t think Waller would go along with that... He’s an institutionalist.”
  —Mike McKee [17:36]

Timestamps for Key Segments

• Powell’s Speech Analysis & Market Surprise – [02:35–04:45]
• Fed Framework: Evolution and Lessons – [05:20–06:34]
• Inside Jackson Hole: The Real Vibe – [07:29–09:13]
• Fed Communications: Complexity & Reform – [10:18–12:19]
• Global Central Banking Context – [12:19–13:39]
• Debate Over Tariffs and Inflation – [14:04–15:54]
• Speculation on Next Fed Chair – [16:21–17:36]

Conclusion

This episode blends sharp policy insight with the hosts’ trademark humor, demystifying the annual Jackson Hole gathering and unpacking Powell’s surprising pivot toward rate cuts. With the uncertainty of global economics, shifting frameworks, and speculation about new leadership, the conversation highlights both the substance and spectacle of central bank policy at this pivotal event.