Jerome Powell indicated a potential rate cut at the Federal Reserve's September meeting but offered no firm commitment, emphasizing uncertainty around timing and pace. The labour market shows a fragile balance caused by a slowdown in both worker supply and demand, increasing downside employment risks that could materialise quickly. Tariffs may add upward pressure on prices and could create a more persistent inflation dynamic, though the baseline view expects those effects to fade. Policy remains in restrictive territory, and upcoming jobs and inflation reports will be pivotal in determining whether and when policy adjustments occur.
Powell's remarks offered little guidance about how soon or how quickly rates might continue to move lower. United States Federal Reserve Chair Jerome Powell has pointed to a possible rate cut at the central bank's September meeting but has stopped short of committing to cutting interest rates in remarks that walked a narrow line, acknowledging growing risks to the job market while also saying risks of higher inflation remain.
While the labour market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising. And if those risks materialise, they can do so quickly, Powell told an audience of international economists and policymakers at the Fed's annual conference in Jackson Hole, Wyoming, on Friday.
It is also possible, however, that the upward pressure on prices from tariffs could spur a more lasting inflation dynamic, and that is a risk to be assessed and managed. The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance, Powell said,
Collection
[
|
...
]