NEW: Powell Cracks, Suggests Rate Cuts Are A Possibility

Jerome Powell, chairman of the Federal Reserve, dropped hints on Friday that sometime next month, central bank policymakers might be able to take a hatchet to interest rates due to current economic conditions. The news was well received by Wall Street.

Powell delivered a speech at the Fed’s yearly Economic Policy Symposium, in Jackson Hole, Wyoming, where he said that, “the balance of risks appear to be shifting” between goals of fully employment and stable prices.

He then said both the labor market and the economy are in a very good place as tariffs enacted by President Donald Trump come into full effect. However, the chairman also stated that tariffs come with risks that have to be taken into consideration as they could cause inflation to go up.

After the speech, the stock market soared. Both the Dow Jones and Nasdaq Composite spiked by two percent, while the S&P 500 rose more than 1.5 percent.

Powell then revealed that the economy is currently in the middle of what he called an “unusual situation,” with risks of a worse-than-expected labor market going up. “And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment,” Powell continued.

“The Federal Reserve often lowers interest rates if unemployment is high in an attempt to stimulate economic activity, which can lead to companies hiring more people. The year-over-year inflation rate of 2.7%, however, remains above the Fed’s 2% benchmark. The next inflation report is scheduled to be released on September 11, and the Fed is set to meet again to discuss interest rates on September 16-17,” The Daily Wire reported.

President Trump has been ripping into Powell for months now, arguing that the Fed needs to get on the ball and make cuts to interest rates. Earlier in 2025, the president threatened to hand Powell a pink slip, a move that is unprecedented for a commander-in-chief to make. However, Trump has since backed off the threat, stating he would wait until Powell’s term in the position was up in May 2026.

The Fed recently decided to keep the rates where they have been for awhile, which caused some contention among policymakers. Two Fed governors, Michelle Bowman and Christopher Waller, both candidates to take Powell’s spot, publicly disagreed with the decision in July.

On Wednesday, President Trump tore into Powell, saying that his hesitancy to lower rates was “hurting the Housing Industry, very badly.”

“People can’t get a Mortgage because of him. There is no Inflation, and every sign is pointing to a major Rate Cut,” Trump remarked.