U.S. Federal Reserve Chair Jerome Powell on Friday signaled the possibility of lowering interest rates in the coming months, despite the ongoing risk of rising inflation.
With the U.S. labor market and economic growth weakening, the shifting balance of risks to the Fed's employment and inflation targets may warrant an adjustment to its policy stance, Powell said at the central bank's annual symposium in Jackson Hole, Wyoming.
Powell stressed that tariffs have a clear and distinct impact on consumer prices, with effects expected to build over the coming months. However, significant uncertainty remains regarding their precise timing and extent. Furthermore, as tariff levels are continually adjusted, the time required for price adjustments could be extended.
Powell affirmed, however, that the Fed will not permit an one-time price surge to evolve into persistent inflation under any circumstances.
The same day, the Fed also released a revised Statement on Longer-Run Goals and Monetary Policy Strategy, which eliminated the average inflation targeting framework in favor of a return to a more flexible approach.
Since January, the Fed has held the federal funds rate steady within a target range of 4.25 percent to 4.5 percent. This stance has persisted despite repeated calls from President Donald Trump for the central bank to cut rates, arguing that the U.S. government is paying substantial interest on its debt.
US Fed chair signals possible interest rate cut soon
US Fed chair signals possible interest rate cut soon
US Fed chair signals possible interest rate cut soon
