Federal Reserve Chair Jerome Powell is not known for giving decisive hints. Still, on Tuesday he did something rare: He openly acknowledged the rising “downside risks to unemployment” in a clearly dovish signal that the central bank is preparing to ease monetary policy.
Powell’s speech, delivered at an event for the National Association for Business Economics (NABE), was nominally about the Fed’s balance sheet. However, it concluded with a carefully placed shift in tone: The labor market is weakening faster than previously thought; inflation is no longer the sole threat; and policy may finally need to “take another step toward a more neutral stance.”
