Federal Reserve Chair Jerome Powell has left the door open for a potential interest rate cut at the central bank’s September policy meeting, but stopped short of making a firm commitment.

Speaking on Friday at the Fed’s annual Jackson Hole Economic Symposium in Wyoming, Powell walked a delicate line — acknowledging that risks to the labor market are rising while also warning that tariffs could reintroduce upward pressure on inflation.

> “While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” Powell told international economists and policymakers.

“This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly.”

Powell also noted that tariffs could push prices higher, potentially fueling “a more lasting inflation dynamic.” Still, he stressed that the Fed remains cautious, weighing both employment stability and inflationary risks before adjusting policy.

The remarks come as the U.S. economy faces a shifting balance of risks:

Labor Market: Job growth has slowed, raising concerns that employment could weaken further.

Inflation: Tariffs remain a source of price pressure, but Powell argued the baseline forecast is for that impact to fade over time.

Markets: Investors responded positively to Powell’s comments, with U.S. stocks rising. Traders now assign nearly a 90% probability of a quarter-point rate cut at the Fed’s September 16–17 meeting, up from about 75% before the speech.

However, Powell offered no clarity on how aggressively the Fed might cut rates beyond September, a point likely to fuel continued political pressure from President Donald Trump, who has repeatedly called for immediate, deeper cuts.

The decision is expected to hinge heavily on upcoming economic data. The August jobs report (due September 5) and fresh inflation readings on consumer and producer prices will likely guide the Fed’s next move.

Analysts say Powell’s cautious tone underscores the Fed’s balancing act: providing enough policy support to safeguard jobs while avoiding a resurgence of inflation that could destabilize markets.