Powell Signals Fed Is on Track to Keep Cutting Rates

Federal Reserve Chairman Jerome H. Powell indicated on Wednesday that the central bank is likely to continue its recent trend of cutting interest rates, citing ongoing concerns about the labor market and the potential risks associated with rising inflation. Despite the growing threat of higher prices fueled by President Trump’s tariffs, Powell emphasized that the labor market risks currently facing the economy outweigh those posed by inflation.

In a move that was widely expected, Powell’s comments suggest that the Fed will maintain its accommodative monetary policy stance in the near term. The chairman’s assessment of the economy highlights the delicate balance the Fed faces in navigating the current economic landscape. On one hand, the labor market has shown signs of slowing, with recent data indicating a decline in job growth and an uptick in unemployment claims. On the other hand, the ongoing trade tensions and tariffs imposed by the Trump administration have raised concerns about the potential for higher inflation.

Powell’s remarks are seen as a signal that the Fed will continue to prioritize the labor market and economic growth over inflation concerns, at least for now. The chairman’s stance is consistent with the Fed’s dual mandate to promote maximum employment and price stability. By keeping interest rates low, the Fed aims to support economic growth and job creation, while also keeping inflation in check.

The Fed’s rate-cutting cycle began in July, when the central bank lowered interest rates for the first time in a decade. Since then, the Fed has implemented two more rate cuts, bringing the federal funds target rate down to a range of 1.5% to 1.75%. Powell’s comments on Wednesday suggest that further rate cuts may be on the horizon, although the timing and magnitude of any future moves will depend on incoming economic data.

Overall, Powell’s signal that the Fed is on track to keep cutting rates reflects the central bank’s cautious approach to the economy. As the global economic landscape continues to evolve, the Fed will likely remain vigilant, using its monetary policy tools to support economic growth and stability.