Fed Chair Powell Hints Possible Rate Cuts Amid Rising Inflation, Job Risks

Federal Reserve Chair Jerome Powell, in his Jackson Hole speech, signaled a cautious openness to lowering interest rates in the coming months amid signs of economic slowdown and rising risks to the labor market. Powell highlighted the challenging balance the Fed faces between controlling persistent inflation and responding to weakening job growth, noting that both hiring demand and labor supply have declined, creating vulnerability in the labor market. He emphasized that the Fed will proceed carefully, basing decisions on evolving inflation and unemployment data, with a potential rate cut contingent on further economic developments. Powell also acknowledged the visible impacts of tariffs on consumer prices but committed to preventing a one-time price increase from becoming a persistent inflation issue. The Fed's measured approach contrasts with President Donald Trump's calls for more immediate rate cuts, reflecting the complexity of managing monetary policy under conflicting pressures. Powell’s stance indicates a shift from a strict inflation focus toward greater consideration of risks to jobs and growth, with markets awaiting clearer signals at the Fed’s September meeting.