Federal Reserve Chair Jerome Powell signaled Friday that a long-awaited interest rate cut could be on the table at the Fed’s next policy meeting—sending Wall Street into a sharp rally.
Speaking at the Fed’s annual Economic Policy Symposium in Jackson Hole, Wyoming, Powell stated that “the balance of risks appear to be shifting” between full employment and price stability. While inflation remains elevated, Powell acknowledged growing concerns about a potential slowdown in the labor market.
“The economy is in an unusual situation,” Powell said. “If risks materialize, they can do so quickly—in the form of sharply higher layoffs and rising unemployment.”
Markets Surge on Dovish Signal
Markets responded immediately to Powell’s remarks. The Dow Jones and Nasdaq each jumped 2%, while the S&P 500 rose more than 1.5%. Investors took the comments as a clear hint that the Fed may act as early as next month to cut rates if economic conditions warrant it.
The Fed has kept interest rates elevated to curb inflation, which currently stands at 2.7%—above its 2% benchmark. The next inflation report is expected September 11, followed by the Fed’s next rate-setting meeting on September 16-17.
Trump Ramps Up Pressure
President Donald Trump, who has repeatedly called on the Fed to slash interest rates, wasted no time weighing in. Earlier this week, Trump accused Powell of “hurting the housing industry” and claimed that “people can’t get a mortgage because of him.”
“There is no inflation, and every sign is pointing to a major rate cut,” Trump posted on Truth Social.
The president has also suggested he will replace Powell when his term ends in May 2026. Trump had previously floated the idea of firing Powell early, but later said he would wait to replace him through the proper process.
White House Eyes Powell’s Replacement
Treasury Secretary Scott Bessent confirmed that the administration is vetting 11 candidates to succeed Powell. The shortlist includes:
Fed Governors Michelle Bowman, Christopher Waller, and Philip Jefferson
White House National Economic Council Director Kevin Hassett
Former Fed Governors Kevin Warsh and Larry Lindsey
Dallas Fed President Lorie Logan
Former St. Louis Fed President James Bullard
BlackRock executive Rick Rieder
Jefferies strategist David Zervos
Economist Mark Sumerlin
Powell’s recent decisions have stirred dissent inside the Fed as well, with both Bowman and Waller publicly opposing the Fed’s move to hold rates steady in July.
Looking Ahead
With inflation still above target and the labor market showing signs of softening, Powell’s remarks signal a possible pivot. The September 11 inflation report may determine whether the Fed pulls the trigger on a rate cut—an outcome that both markets and the White House appear to be hoping for.
The post Fed Chair Powell Hints at Rate Cut as Trump Pressure Mounts and Markets Rally appeared first on Real News Now.
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