Federal Reserve Chair Jerome Powell recently spoke at the central bank’s annual conference, where he hinted that a change to interest rates might be coming soon. In his speech, Powell described two competing risks for the U.S. economy. Still, he seems to be giving in to Trump’s demands for a lower interest rate.
The first risk is that inflation could get worse, which would require the Fed to raise rates. The second risk is that the job market could weaken, which would mean the Fed should lower rates. He called the situation a challenge but indicated he is currently more worried about a possible economic downturn than about a long-term rise in inflation. He said, “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,” according to Politico.
