‘Impact of tariffs clearly visible’: US Fed chair Powell hints at rate cuts over weak jobs data | World News

US Federal Reserve Chair Jerome Powell Friday warned that a weakening job market could soon force the central bank to cut interest rates, in one of his last speeches as Fed chair before his term ends in 2026.
Speaking at the Jackson Hole symposium in Wyoming, Powell said “downside risks to employment are rising” and suggested that keeping rates at restrictive levels may no longer be sustainable.
“While the labour market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising. And if those risks materialise, they can do so quickly,” Powell said.
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He noted that the inflationary effect of Trump’s tariffs could be short-lived, adding that the Fed’s policy stance may need adjustment after holding rates steady for eight consecutive months.
“It is also possible, however, that the upward pressure on prices from tariffs could spur a more lasting inflation dynamic, and that is a risk to be assessed and managed.”
Citing the latest inflation figures, Powell noted that “higher tariffs have started to drive up prices in certain categories of goods.” Unlike in previous months, he appeared more certain that the impact of tariffs was now “clearly visible.”
“We anticipate those effects will build in the months ahead, though the timing and scale remain highly uncertain,” he added.Story continues below this ad
“The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he said, noting that while tariffs are expected to push prices higher, their inflationary effect is likely to fade over time.
The Dow Jones Industrial Average surged 800 points to a record high after Powell hinted at possible rate cuts, triggering a broad market rally. The Nasdaq and S&P 500 each climbed more than 1.5% in intra-day trade.
This year’s Jackson Hole gathering comes at a pivotal moment for the Fed, which is under mounting political pressure. The Trump adminration has escalated attacks on the central bank, with the Justice Department signaling a probe into Fed Governor Lisa Cook, following accusations from a senior housing official.