Fed Chair Powell Signals Potential Rate Cuts Amid Softening Labor Market
Federal Reserve Chair Jerome Powell indicated a shift in monetary policy focus as the U.S. job market shows signs of weakening. Speaking at the National Association for Business Economics in Philadelphia, Powell highlighted rising downside risks to employment despite the economy maintaining a firmer trajectory than anticipated.
Market sentiment turned bullish following Powell's remarks, with the Dow Jones Industrial Average and S&P 500 reversing earlier losses. Traders are now pricing in two additional quarter-point rate cuts for 2024—likely in October and December—as the Fed balances inflation control with labor market support.
The central bank's pivot comes as hiring slows and business sentiment cools, though layoffs remain historically low. Powell's acknowledgment of deteriorating job market conditions suggests the Fed may prioritize employment stabilization after its prolonged inflation battle.
