Federal Reserve Chair Jerome Powell hinted Friday that the central bank may lower interest rates in the coming months but stressed that any decision will be made cautiously as inflation and job data continue to shift.

Balancing Jobs and Inflation

Powell said the Fed faces risks on both sides: rising unemployment and stubbornly high inflation. Cutting rates could boost hiring, while keeping rates higher helps fight inflation.

“The stability of the unemployment rate and other labor market measures allows us to proceed carefully,” Powell said. Still, he noted that the “shifting balance of risks may warrant adjusting our policy stance,” suggesting a possible cut at the Fed’s Sept. 16–17 meeting.

Markets, Tariffs, and Political Pressure

Powell delivered his remarks at the Fed’s annual Jackson Hole symposium, a closely watched event by Wall Street and the White House.

Financial markets largely expect a September cut, though expectations dipped this week. President Donald Trump has repeatedly pressed Powell to act faster, arguing lower rates would reduce the government’s $37 trillion debt burden.

Powell also cautioned that tariffs are pushing consumer prices higher, particularly for imported goods like furniture, toys, and shoes. Inflation rose 2.7% in July from a year earlier, while core inflation, excluding food and energy, climbed 3.1%.

Job Market Outlook

Despite slower hiring this year, unemployment remains relatively low. Powell said reduced immigration means fewer new jobs are needed to maintain stability, but he acknowledged that sluggish hiring raises the risk of layoffs and a sharper downturn.

What’s Next

The Fed will closely monitor inflation and labor trends before making its next move. Powell gave no firm timeline but signaled that rate cuts are now firmly on the table.

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