Fed's Powell unveils new policy framework at Jackson Hole
Federal Reserve Chair Jerome Powell just rolled out a new policy framework at the Jackson Hole symposium on August 22, 2025.
The update comes as inflation heats up again and interest rates move away from their old near-zero levels.
Powell made it clear this isn't a total overhaul—just a shift to more flexible inflation targeting, dropping the "makeup" approach used back in 2020.
New framework skips setting specific job targets
The new framework is designed to handle all kinds of economic ups and downs, and skips setting specific job targets—which Powell called "unwise."
The old strategy from 2020 was thrown off by COVID-19, leading to high inflation and rapid rate hikes.
Now that things are calming down, the Fed's target rate sits at 4.25%-4.50%.
Still, Fed officials have suggested that tariffs and increased government borrowing could keep rates higher for longer than some expect—so don't expect those super-low pre-pandemic rates to come back anytime soon.