Jay Powell has opened the door to a Federal Reserve interest rate cut in September, as the central bank chair said a softening US labour market could offset risks that Donald Trump’s tariffs will hurt inflation.“The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said at the Fed’s economic summit in Jackson Hole, Wyoming, yesterday.The remarks put Powell in the camp of doves on the rate-setting Federal Open Market Committee and signal that he could support a quarter-point cut at the bank’s meeting next month.US government debt rallied strongly after his speech. The yield on the twoyear Treasury note fell 0.1 percentage points to 3.69 per cent. The S&P 500 index jumped 1.6 per cent, while the dollar dropped about 0.9 per cent against a basket of half a dozen peers.The speech comes at a pivotal time for the Fed. The US president has launched a fierce campaign against Powell and other top Fed officials, insisting the central bank should drastically cut rates.The Fed has instead held its main rate at a 4.25-4.5 per cent range this year, following 1 percentage point of cuts in 2024, as some officials worry Trump’s tariffs on trading partners will ignite a fresh surge in inflation.
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