Facing Trump pressure, US Fed chair hints at rate cut, but offers no timeline

Federal Reserve Chair Jerome Powell on Friday opened the door ever so slightly to lowering a key interest rate in the coming months but gave no hint on the timing of a move and suggested the central bank will proceed cautiously as it continues to evaluate the impact of tariffs and other policies on the economy.

In a high-profile speech that will be closely watched at the White House and on Wall Street, Powell said that there are risks of both rising unemployment and stubbornly higher inflation. That puts the Fed in a tough spot, because it would typically cut its short-term rate to boost hiring, while keeping it high – or raising it – to fight inflation.

“The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said in prepared remarks. That suggests the Fed will continue to evaluate jobs and inflation data as it decides whether to cut rates, including at its next meeting on September 16-17.

“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he added, a more direct sign that Powell is considering a rate cut than he has made in previous comments.

Still, Powell’s remarks suggest the Fed will proceed carefully in the coming months and will make its rate decisions based on how inflation and unemployment evolve in the coming months. That may frustrate financial markets, which have hoped for clearer signals of the Fed’s next moves, and US President Donald Trump, who has castigated Powell for not lowering rates sooner.

  

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