Federal Reserve Chair Jerome Powell delivered a clear message during his speech at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming, stating that “the time has come” for the central bank to begin lowering interest rates. Powell indicated that the Fed is ready to adjust its policy, with the timing and pace of rate cuts depending on incoming data and evolving economic conditions.
Powell’s remarks come just weeks before the Fed’s September 17-18 meeting, where the central bank is expected to announce its first interest rate cut since 2020. He acknowledged recent signs of weakness in the labor market, noting that the Fed does not seek further cooling in labor conditions. The July jobs report showed only 114,000 jobs were added, with the unemployment rate rising to 4.3%, the highest since October 2021.
Powell emphasized that while the Fed’s goal of restoring price stability has made significant progress, the job is not yet complete. He highlighted that inflation has declined significantly and that the Fed’s efforts to anchor expectations and moderate demand have put inflation on a sustainable path toward the 2% objective. Powell’s speech reflected a shift from his remarks at Jackson Hole in 2022, where he focused on the need for further rate increases to combat inflation. Now, Powell suggests that the central bank’s work in controlling inflation is nearing completion.