Federal Reserve Chair Jerome Powell used his Jackson Hole speech to strike a surprisingly dovish tone, warning that downside risks to the U.S. labor market are rising and that monetary policy “may warrant adjusting” if the economic slowdown deepens.
Many economists had expected Powell to avoid any hint of a rate cut, instead reiterating the Fed’s wait-and-see stance. Instead, Powell’s speech delivered a clear signal: the Fed’s focus is shifting from inflation toward mounting risks to jobs and growth.
“The situation suggests downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment,” Powell said on Friday.
It’s a notable departure from the Powell of last year, when inflation was public enemy number one.
‘Downside Risks To The Labor Market Are Rising’
Job growth has sharply decelerated to just 35,000 per month over the past three months, …