Fed Chair Powell Hints at Future Interest Rate Cuts Amid Job Market Concerns

WASHINGTON (AP) — Financial markets anticipate that the Federal Reserve will cut borrowing costs soon, fueled by remarks from Fed Chair Jerome Powell on Tuesday. Speaking at the National Association for Business Economics conference in Philadelphia, Powell suggested that the current inflation and unemployment trends remain similar to those observed last month, when the Fed lowered its benchmark interest rate.

“Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago,” Powell explained. His comments came amid a government data blackout caused by a shutdown, which has closed agencies responsible for economic statistics.

Even though the Bureau of Labor Statistics‘ job creation report for September, due on October 3, will likely not be released, Powell remains optimistic about future cuts. The next Federal Open Market Committee meeting is scheduled for October 29-30, where markets are pricing in a 97% chance of a rate cut.

Powell emphasized the delicate balance the Fed must maintain between supporting the labor market and ensuring inflation remains controlled, explaining, “If we move too quickly, we may leave the inflation job unfinished.” He pointed out that the job market’s condition, which has been weakening, is urging the Fed to consider additional rate cuts.

Other officials have echoed similar concerns, noting that while inflation has risen over recent months, the Fed’s dual mandate requires prioritizing employment. Analysts view Powell’s remarks as leaning toward “dovish” sentiments, indicating further reductions may come soon.

In closing remarks, Powell signaled that the Fed’s approach to monetary policy will depend on balancing employment recovery while managing inflation risks. He stated, “We’re in the difficult situation of balancing those two things,” referencing the ongoing challenges posed by external factors, such as tariffs and geopolitical conditions.