Fed's Powell Signals Rate Cut on Job Risks

Powell emphasized that while inflation remains a concern, he is more worried about economic weakening, stating that "the shifting balance of risks may warrant adjusting our policy stance." He explicitly distanced the Fed's decision-making from political pressure, particularly from President Donald Trump, asserting that policy will be "based solely on [Fed officials’] assessment of the data." Powell also downplayed the likelihood of tariffs leading to a sustained inflation spiral, viewing them more as one-time price increases that will work their way through supply chains. He reaffirmed the Fed's commitment to its 2 percent inflation target and announced updates to the Fed's framework document.

The next rate decision is scheduled for mid-September, placing a heightened focus on incoming economic data, especially labor market indicators.