Facing Trump pressure, Powell hints at a rate cut, but will ‘proceed carefully’
The stock market jumped in response to Powell’s remarks, with the S&P 500 rising 1.5 per cent for its first gain in six days
Federal Reserve Chair Jerome Powell on Friday opened the door ever so slightly to lowering a key interest rate in the coming months but gave no hint on the timing of a move and suggested the US central bank would proceed cautiously as it continued to evaluate the impact of tariffs and other policies on the economy.
In a high-profile speech closely watched at the White House and on Wall Street, Powell said that there were risks of both rising unemployment and stubbornly higher inflation. Yet he suggested that with hiring sluggish, the job market could weaken further.
“The shifting balance of risks may warrant adjusting our policy stance,” he said, a reference to his concerns about weaker job gains and a more direct sign that the Fed is considering a rate cut than he has made in previous comments.
Still, Powell’s remarks suggest the Fed will proceed carefully in the coming months and will make its rate decisions based on how inflation and unemployment evolve.
The Fed has three more meetings this year, including next month, in late October, and in December, and it is not clear whether the Fed will cut at all those meetings.
“The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said. That suggests the Fed will continue to evaluate jobs and inflation data as it decides whether to cut rates.