Thursday, October 16, 2025-Federal Reserve Chair Jerome Powell indicated that the central bank remains open to cutting interest rates again if economic conditions weaken further.
Speaking after the Fed’s latest policy review, Powell said inflation continues to ease gradually while job growth shows signs of slowing, suggesting the economy may need additional support in the months ahead.
He emphasized that future decisions would depend on data, particularly inflation and labor market trends, rather than preset timelines.
Powell noted that the recent moderation in wage growth and softening consumer demand have reduced inflationary pressure, giving the Fed more flexibility to adjust its stance. Still, he warned against complacency, stressing that maintaining price stability remains the central bank’s top priority.
Economists interpreted his tone as cautiously dovish, signaling the Fed’s readiness to act if the slowdown deepens or unemployment begins to rise sharply.
Financial markets reacted swiftly to Powell’s remarks. Stocks rallied, bond yields declined, and the U.S. dollar weakened as investors increased bets on at least two rate cuts before year-end.
The speech reinforced growing optimism that the Fed is preparing for a softer landing, an outcome where inflation falls without triggering a full-blown recession.
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