Federal Reserve Chair Jerome Powell hinted during his speech at the Jackson Hole symposium on Friday that an interest rate cut may be possible in the coming period, but stressed that elevated uncertainty makes the task of monetary policymakers more complicated.
Powell confirmed that the labor market remains strong and the economy has shown resilience, but noted that risks have increased recently, explaining that tariffs could push inflation higher again, which the Fed is seeking to avoid.
He pointed out that the benchmark interest rate is now about 1% lower than a year ago, and that low unemployment gives the Fed room to move cautiously in adjusting monetary policy. He added that baseline expectations and a shift in the balance of risks may indeed warrant a review of the current stance.
Powell said that the Federal Open Market Committee’s decisions will remain “solely data-dependent,” reaffirming the central bank’s commitment to achieving 2% inflation to preserve long-term stability in expectations.
In his assessment of the economy, Powell noted that job growth has slowed alongside weaker consumer spending, highlighting that labor supply and demand are in an “unusual” balance. He also stressed that monetary policy will undergo periodic reviews every five years to adapt to structural changes in the economy.
