FX.co ★ Powell Hints at Fed Rate Cuts Coming

Federal Reserve Chair Jerome Powell indicated that the possibility of a rate cut in September remains open, highlighting increasing threats to the labor market amid persistent inflationary pressures. Powell mentioned the recent July employment report, which revealed weaker hiring than anticipated, cautioning that layoffs could rapidly increase if economic conditions worsen. He also noted that tariffs imposed by President Trump might contribute to ongoing inflation, necessitating a careful approach. Emphasizing the need to balance economic growth and price stability, Powell stated that while the current policy is restrictive, adjustments could be made if the risks increasingly affect employment. Investors are currently placing a 75% likelihood on a September rate cut, though Powell refrained from confirming this. His remarks led to a decrease in Treasury yields, a rise in stock markets, and a decline in the dollar, as markets assessed his effort to maintain policy flexibility amid political pressure.