Powell says that “risk travel balance” could justify a drop in rate earlier

In a high -level speech that will be closely monitored at the White House and Wall Street, Powell said there were rising unemployment and stubbornly higher inflation. This puts the Fed in a difficult situation because it would generally reduce its short -term rate to stimulate hiring, while keeping it high – or by increasing it – to fight against inflation.

“The stability of the unemployment rate and other labor market measures allows us to proceed carefully, because we consider changes in our policy position,” said Powell in prepared remarks. This suggests that the Fed will continue to assess job data and inflation because it decides to reduce rates, including at its next meeting from September 16 to 17.

“Nevertheless, with a restrictive territory policy, the reference prospects and the risk change balance can justify the adaptation of our policy position,” he added, a more direct sign that Powell is considering a drop in rate than what he did in the previous comments.

However, Powell’s remarks suggest that the Fed will always occur carefully in the coming months and will make its pricing decisions according to the evolution of inflation and unemployment in the coming months. This can frustrate the financial markets, which hoped for lighter signals from the next Fed movements, and President Donald Trump, who castigated Powell for not lowering the rates earlier.

Powell took the floor during the Fed annual economic symposium in Jackson Hole, Wyoming, a conference with around 100 academics, economists and central bank officials around the world.

Powell spoke while the markets are largely expecting a drop in rate in September, according to the long -term prices, although these dimensions have slipped this week. Trump has repeatedly called up for rate reductions, arguing that there is “no inflation” and said that a drop would reduce government interests to his 37 billions of dollars in debt.

Trump and his allies increased attacks on the Fed, including this week by calling a Fed governor Lisa Cook, to resign, after Trump official allegedly committed that she had committed mortgage fraud.

In its remarks, the Fed chair stressed that prices raise inflation and could push it higher in the coming months. He also suggested that the labor market is not clearly weakening in a way that would push the Fed to reduce loan costs, which can stimulate growth and hiring.

“The effects of consumer prices prices are now clearly visible. We expect these effects to accumulate in the coming months, with a strong uncertainty on the calendar and the amounts,” said Powell.

Inflation has slipped higher in recent months, but it is down compared to a peak of 9.1% three years ago. The prices have not stimulated inflation as much as some economists worry it, but begin to increase the prices of highly imported goods such as furniture, toys and shoes.

Consumer prices increased by 2.7% in July compared to a year ago, above the Fed target of 2%. Excluding the volatile food and energy categories, basic prices increased by 3.1%.

Regarding the labor market, Powell noted that even if hiring has slowed heavily this year, the unemployment rate remains low. He added that with immigration to decrease sharply, less jobs are necessary to keep unemployment under control.

However, with slow hiring, the risks of a sharper slowdown, with growing layoffs, have increased, said Powell.