Fed’s Powell Signals Rate Cuts Amid Labor Market Concerns, Inflation Risks

Federal Reserve Chair Jerome Powell defended the central bank's recent rate cut decision, emphasizing growing labor market vulnerabilities over persistent inflation. Speaking in Providence, Rhode Island, Powell framed the quarter-point reduction as a necessary balancing act between the Fed's dual mandates.

"Near-term risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation," Powell told business leaders. The remarks follow last week's policy MOVE despite inflation remaining above the 2% target, underscoring what Powell called "no risk-free path" in the current economic crossroads.

Labor market indicators show concerning deceleration, with Powell noting "a marked slowdown" in both job openings and hiring activity. Tariff pressures continue complicating the inflation outlook while employment metrics deteriorate—a combination forcing the Fed's hand. Further cuts remain on the table should labor conditions weaken.