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1h ago

Powell Says Balance of Risks May Warrant Easing, Putting September Rate Cut in Play

Traders boosted odds of a quarter-point cut to nearly 90%, lifting stocks.

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U.S. Federal Reserve Chair Jerome Powell holds a press conference following the issuance of the Federal Open Market Committee's statement on interest rate policy in Washington, D.C., U.S., July 30, 2025. REUTERS/Jonathan Ernst/File Photo
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U.S. dollar, Euro and Pound banknotes are seen in this illustration taken May 4, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

Overview

  • In his Jackson Hole address, Jerome Powell said the baseline outlook and a shifting balance of risks may warrant adjusting policy after eight straight months on hold.
  • He warned that downside risks to employment are rising, describing a labor market in a “curious balance” following a weak July report with about 73,000 jobs added and unemployment near 4.2%.
  • Powell said tariff-driven price increases are now clearly visible across some categories, calling the likely impact short-lived but a risk the Fed must monitor.
  • Markets rallied on the remarks as futures pricing for a 25-basis-point September cut jumped from roughly 70–74% to about 85–90%, with U.S. stocks higher, Treasury yields lower, and the dollar weaker.
  • The Fed remains divided and emphasizes gradual, data-dependent easing, with early-September jobs and price releases and heightened political pressure from the White House seen as pivotal for the next decision.