Federal Reserve Chairman Jerome Powell hinted at the possibility of cutting interest rates during the upcoming meeting in September, but he avoided making a firm commitment.
His remarks came during his speech at the annual economic symposium in Jackson Hole, Wyoming, where he acknowledged the increasing risks threatening the labor market, along with ongoing challenges related to rising inflation.
Powell indicated that the labor market is experiencing an "unusual balance" between supply and demand for jobs, which could increase the likelihood of a rapid decline in employment if these risks worsen. Conversely, he warned that tariffs could add additional pressure on prices, enhancing the risk of inflation.
He added: "The stability of the unemployment rate and other labor market indicators gives us room to act cautiously when considering adjustments to monetary policy."
These statements pave the way for a possible interest rate cut during the Federal Reserve meeting on September 16 and 17, with the decision remaining contingent on the upcoming jobs and inflation data to be released early next month.
The jobs report will be released on September 5, followed by consumer and producer price data the following week, which are key indicators that monetary policymakers will rely on before making a decision.
Despite Powell's hints, he did not provide clear signals about the timing or pace of any upcoming interest rate cuts, which may open the door to new political pressures from former President Donald Trump, who is calling for an immediate rate cut and considers inflation risks to be exaggerated.
It is noteworthy that Trump has recently intensified his attack on the Federal Reserve, calling for Powell and even some members like Lisa Cook to resign.
Currently, the Federal Reserve is keeping the main interest rate at a range of 4.25% to 4.50% since last December, while the inflation rate remains above the official target of 2%, with expectations of further increases due to new tariffs.
