JACKSON HOLE, Wyom.— Federal Reserve Chair Jerome Powell on Friday offered only a cautious signal that rate cuts could be on the horizon, pointing to the heightened uncertainty complicating the central bank’s decision-making, CNBC reported.
Speaking at the Fed’s closely watched annual gathering in Jackson Hole, Wyom., Powell noted in prepared remarks that sweeping shifts in tax, trade, and immigration policy are reshaping the economic landscape. As a result, he said, “the balance of risks appear to be shifting” between the Fed’s dual mandates of maximum employment and stable prices.
Powell acknowledged that the labor market remains solid and the economy has displayed “resilience,” but cautioned that downside risks are mounting. He also warned that new tariffs could reignite inflation, raising the threat of stagflation — a scenario the Fed is determined to prevent, CNBC said.
With the benchmark rate now a full percentage point lower than when he spoke at Jackson Hole last year and unemployment still low, Powell said current conditions give the Fed room to “proceed carefully” in weighing any policy adjustments, CNBC said.
“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he added.
“That was as close as he came during the speech to endorsing a rate cut that Wall Street widely believes is coming when the Federal Open Market Committee next meets Sept. 16-17,” CNBC said.