US Federal Reserve signals rates may fall as growth slows

Shafaq News – Washington

On Friday, US Federal Reserve Chair Jerome Powell indicated that policymakers could cut interest rates at their September 16–17 meeting, citing a weakening labor market and persistent inflation pressures.

Speaking at the Jackson Hole symposium, Powell described the job market as “in a curious balance,” with both supply and demand retreating, warning that deteriorating conditions could quickly lead to layoffs. He also said President Donald Trump’s trade tariffs risk prolonging upward pressure on prices.

Powell confirmed the Fed has abandoned its 2020 framework of tolerating temporary inflation overshoots, reverting to a more traditional focus on price stability alongside employment.

Markets rallied on the remarks, with the S&P 500 climbing 1.6% as traders priced in nearly a 90% chance of a September rate cut.

Economists stressed the difficult backdrop: inflation has eased but remains above target, unemployment is climbing, and tariffs could drive prices higher even as growth slows.