Powell signals Fed may cut rates soon even as inflation risks remain

Published: Friday, August 22, 2025 at 2:11 pm

Powell Hints at Potential Rate Cut, Cautiously

Federal Reserve Chair Jerome Powell signaled a potential shift in monetary policy on Friday, opening the door to possible interest rate cuts in the coming months. Speaking at the Federal Reserve's annual economic symposium, Powell acknowledged the dual risks of rising unemployment and persistent inflation, a complex situation that complicates the central bank's decision-making process.

Powell's remarks suggest the Fed will proceed cautiously, evaluating incoming data on jobs and inflation before making any moves. He indicated that the Fed is considering adjusting its policy stance, a more direct indication of a potential rate cut than previously offered. However, he emphasized that any decisions will be based on the evolving economic landscape.

The Fed's cautious approach may disappoint financial markets, which have anticipated clearer signals regarding the Fed's next steps. President Donald Trump has also been vocal in his criticism of the Fed, advocating for immediate rate cuts.

Powell highlighted the impact of tariffs on inflation, noting that they are contributing to rising prices and could continue to do so in the coming months. He also observed that while hiring has slowed, the unemployment rate remains low. The Fed is monitoring these factors as it assesses the need for policy adjustments.

The Fed's inflation target is 2%, but consumer prices rose 2.7% in July from a year ago. Core prices, excluding food and energy, rose 3.1%.

BNN's Perspective:

The Fed's measured approach reflects the delicate balance it must strike. While the potential for a rate cut is now on the table, the Fed is right to proceed with caution, given the mixed economic signals. The impact of tariffs and the evolving job market require careful monitoring.

Keywords: Jerome Powell, Federal Reserve, interest rates, inflation, unemployment, tariffs, monetary policy, rate cut, economy, jobs

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