Overview

• Jerome Powell said the balance of risks has shifted with policy in restrictive territory, signaling the Federal Reserve may adjust its stance.
• Futures markets swiftly repriced, with CME FedWatch showing roughly a 90% chance of a 25‑basis‑point cut in September as stocks rallied and Treasury yields fell.
• Powell warned that downside risks to employment are increasing in a “curious kind of balance” labor market, following weak July hiring and downward revisions to prior months.
• He said tariff effects on consumer prices are now clearly visible and likely to build in coming months, while vowing not to let one‑time price increases become a persistent inflation problem.
• Powell reaffirmed a 2% inflation objective under a revised policy framework, emphasized Fed independence and data dependence, and noted the policy rate remains around 4.25%–4.50% despite political pressure from the White House.