Powell Says Outlook, Shifting Balance Of Risks 'May Warrant' Lower Rates

(RTTNews) - Federal Reserve Chair Jerome Powell delivered a highly-anticipated speech before the Jackson Hole Economic Symposium on Friday, although he touched only briefly on the outlook for monetary policy.

In prepared marks, Powell noted the labor market remains near maximum employment and inflation has come down a great deal from its post-pandemic high but cautioned "the balance of risks appears to be shifting."

Powell said the risks to inflation are tilted to the upside, while the risks to employment are tilted to the downside, which he called "a challenging situation."

"When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate," he said, referring to the Fed's dual goals of maximum employment and inflation at a rate of 2 percent over the longer run.

Powell noted interest rates are a full percentage point lower than a year ago and said the "stability of the unemployment rate and other labor 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 added.

The Fed Chief reiterated that monetary policy is not on a "preset course" and stressed that future interest rate decisions would be "based solely on [officials'] assessment of the data and its implications for the economic outlook and the balance of risks."

In his remarks, Powell also highlighted "significant uncertainty" about the long-term economic impact of President Donald Trump's changes in trade and immigration policies.

The Fed's next monetary policy meeting is scheduled for September 16-17, with CME Group's FedWatch Tool currently indicating a 91.5 percent chance the central bank will lower interest rates by a quarter point.