Powell caves in and leaves the door open for rate cut

Federal Reserve Chairman Jerome Powell said he is prepared to implement an interest rate cut, while cautioning that certain risks could still emerge.

"The downside risks to employment are increasing," Powell said during the Jackson Hole Economic Policy Symposium, in remarks picked up by AFP.

"While the labor market appears to be in balance, it is a curious equilibrium resulting from a marked slowdown in both the supply of and demand for workers," the Fed chairman added.

During his speech, Powell referenced the economic management of President Donald Trump—with whom he has had a tense relationship in recent weeks—particularly highlighting the administration’s trade policies.

"The effects of tariffs on consumer prices are already clearly visible" and could become even more severe in the coming months, Powell said.

According to the Fed chairman, there is significant uncertainty regarding the timing and magnitude of the effects of the tariff increase.

"We will not allow a one-time increase in the price level to become an ongoing inflation problem," he concluded.