Jerome Powell signals Fed may soon cut interest rates

Federal Reserve Chair Jerome Powell on Friday signaled that the central bank could potentially cut interest rates soon.

While Powell did not explicitly indicate he was in favor of a rate cut at the Fed’s next meeting in September, he said during a Friday speech that the “balance of risks appears to be shifting.” Powell’s comments come after President Donald Trump has repeatedly called for the Fed to lower interest rates in 2025.

“Over the course of this year, the U.S. economy has shown resilience in a context of sweeping changes in economic policy,” Powell said during his speech at the central bank’s annual summit in Jackson Hole, Wyo. “In terms of the Fed’s dual-mandate goals, the labor market remains near maximum employment, and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs. At the same time, the balance of risks appears to be shifting.”

Powell suggested in his speech that the Fed is currently facing a “challenging situation,” citing economic factors such as higher inflation. He notably claimed that “the shifting balance of risks” may warrant the Fed “adjusting” its policy stance soon.

“In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation,” Powell said. “When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.”

“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he added. “[Federal Open Market Committee] FOMC members will make these decisions, based solely on their assessment of the data and its implications for the economic outlook and the balance of risks. We will never deviate from that approach.”

Additionally, Trump has repeatedly called on the Fed chair to resign this year over his declining to slash interest rates, even referring to him as “too late Powell.” On Wednesday, Trump called on Federal Reserve Board of Governors member Lisa Cook to step down from her role over alleged mortgage fraud.

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