Overview

• Powell said restrictive policy and a changing balance of risks could justify adjusting the Fed’s stance, signaling openness to easing without committing to timing.
• Markets rallied on the remarks as stocks rose, the dollar fell and Treasury yields declined, with LSEG data showing September cut odds jumping toward or above 90% after dipping near 71% a day earlier.
• Powell described an unusual labor backdrop of cooling demand and supply with unemployment still low, while warning that higher tariffs are lifting prices with uncertain persistence.
• Political pressure escalated as President Trump demanded Governor Lisa Cook’s resignation after FHFA Director Bill Pulte alleged mortgage fraud and said he referred the matter to the Justice Department; Cook said she would not be intimidated.
• The Fed’s internal debate remains live after July minutes showed dissent from Christopher Waller and Michelle Bowman, and a recent resignation enabled Trump to nominate Stephen Miran, with the policy path still dependent on upcoming inflation and jobs data.