Powell suggests rate cuts are coming — but not because Trump demanded them

Our live coverage of the Federal Reserve’s Jackson Hole meeting has ended. Read more about Fed Chair Jerome Powell’s speech here and the market reaction here.

James Bullard at the Jackson Hole conference in August 2019.

James Bullard, former president of the St. Louis Federal Reserve, said Wednesday he has been in touch with Treasury Secretary Scott Bessent regarding the search for a new Fed chair.

Bullard told CNN’s Richard Quest on Wednesday afternoon that he anticipates meeting with Bessent after Labor Day, suggesting that President Donald Trump has not finalized his pick to replace Jerome Powell when his term term as Fed chair expires in May next year.

Bullard, now dean of Purdue University’s Mitch Daniels School of Business, said he’d take the position if it were offered to him only if the central bank was “set up for success.”

Among three criteria he laid out for that was a guarantee that the Fed would be able to continue to defend its independence from political interferences.

Trump, however, has threatened the Fed’s independence on numerous occasions, previously arguing that Fed officials should be required to consult him on interest rate decisions. The president has also been vocal about wanting rates to be lower.

Bullard said Wednesday that rates currently are “somewhat” too high based on economic conditions and that it could be appropriate to lower rates by a full point over the next year.

From left, Governor of the Bank of England Andrew Bailey, President of the European Central Bank Christine Lagarde, and Governor of the Bank of Japan Kazuo Ueda pose with Federal Reserve Chair Jerome Powell during a break at the annual Jackson Hole Economic Policy Symposium on Friday.

Federal Reserve Chair Jerome Powell’s speech in Jackson Hole, Wyoming, on Friday sent stocks and bonds rallying.

Here’s a look at what happened in markets today:

US stocks soared higher after Powell’s speech signaled interest rate cuts could be on the horizon. While the Fed chair highlighted concerns about slowing growth in the labor market, investors still cheered the prospect of lower rates, which can be a boon for stocks.

Bonds rallied and Treasury yields fell as traders reconfigured their expectations for rate cuts in September. Investors tend to buy bonds when rates are expected to come down in order to lock in the current relatively high rates.

The US dollar broadly weakened against other major currencies as Powell’s remarks hinted at slowing economic growth and the potential for lower rates. A weaker economy can lead to a weakening of the dollar.

Canadian Prime Minister Mark Carney speaks during a press conference after a Cabinet meeting on July 30.

After speaking with President Donald Trump on Thursday, Canadian Prime Minister Mark Carney announced on Friday he’s lifting retaliatory tariffs placed on an extensive list of American goods earlier this year. The move is set to take effect September 1.

The tariffs he’s dropping include those on goods that comply with the terms of the United States-Mexico-Canada Agreement, Carney announced Friday. Carney, however, is not removing the 25% tariff placed on American steel and aluminum as well as tariffs on American cars.

Canada is America’s top export market and has been one of the only countries so far to impose retaliatory tariffs on American goods. The move to lift tariffs could boost the American economy if businesses import more from the United States as a result.

Carney said Trump specifically told him that removing these tariffs would kick-start trade negotiations. Carney also said they agreed to “intensify our discussions to address current trade challenges in those strategic sectors and to seize major immediate opportunities for us both in trade, investment and security.”

Carney sought to establish throughout his Friday press conference that he’s not capitulating to Trump by removing tariffs but rather was “matching” the US, which hasn’t charged duties on Canadian goods that comply with USMCA.

The White House praised Carney’s actions, labeling them “long overdue.”

“We look forward to continuing our discussions with Canada on the Administration’s trade and national security concerns,” a White House official told CNN.

Federal Reserve Chair Jerome Powell at the Jackson Hole economic symposium on Thursday.

Wall Street on Friday leaned in to bets that the Federal Reserve will lower its benchmark interest rate at its next meeting, in September.

Traders were pricing in an 89% chance the Fed cuts rates in September, according to CME FedWatch. That’s up from a 75% chance before Fed Chair Powell gave a speech that hinted at lower interest rates on the horizon.

Commuters on a train platform in Philadelphia, Pennsylvania, on August 11.

Federal Reserve Chair Jerome Powell cautioned Friday that the US labor market’s state of weakening supply and demand is putting it at greater risk for cracking under pressure.

The “curious state of balance,” as Powell referenced, however, is also likely a longer-term structural change of employers doing more with less, economist Noah Yosif, of the American Staffing Association, said to CNN Friday.

“Employers have reduced their appetites to bring on additional workers, but at the same time, they’re still maintaining their output,” Yosif said in an interview.

And instead of adding more workers, businesses are holding on to the ones they have and turning to artificial intelligence and other technologies to try and fill the gap, he added.

Immigration, specifically federal policies seeking to reduce the flow of foreign workers, is expected to be another driver of companies learning to do more with less, Yosif said.

“These significant fluctuations in immigration policy are really not going to go away anytime soon due to our political climate,” he said. “This uncertainty is going to cause companies to, once again, try and reduce their reliance on labor supply so that their production process, their supply chain can operate on a relatively consistent basis despite rapid changes in policy.”

People take in the view while the Federal Reserve Bank of Kansas City's 2025 Jackson Hole Economic Policy Symposium takes place in Jackson Hole, Wyoming, on Thursday.

Every summer, central bankers and well-known economists gather at a mountainside lodge near Grand Teton National Park in Jackson Hole, Wyoming, to attend an annual conference hosted by the Kansas City Federal Reserve.

But, of all places to gather, you might be wondering: Why Jackson Hole?

Its location is owed in part to former Fed Chair Paul Volcker, who advocated for the Kansas City Fed’s conference moving there to take advantage of the ideal fly fishing.

Since it moved there from Colorado in 1982, it’s remained the location of the conference.

Lower borrowing costs in the months ahead was the highlight of Federal Reserve Chair Jerome Powell speech Friday — but it wasn’t the only thing that he telegraphed.

In the second part of his lengthy remarks, Powell described the results of the Fed’s latest review of its so-called policy framework, or how central bankers think about and communicate policy on interest rates. The policy framework is revisited every five years.

Powell said that experiences during the Great Recession, such as a slow economic recovery, influenced those prior strategies and ultimately left the Fed fighting the last economic battle when there was a once-in-a-generation burst of high inflation in 2021. The Fed was criticized for being late to respond.

“We thought that inflation would subside fairly quickly without a sharp tightening in our policy stance,” Powell said. “This year’s review considered how economic conditions have evolved over the past five years.”

Powell said the new framework has a much broader scope — suited to battle both high inflation and high unemployment — and is no longer focused on the “effective lower bound” as a potential issue, which is a concept in central banking arguing that the economy has a bias of falling inflation.

A statement within the Fed’s policy framework now says: “Price stability is essential for a sound and stable economy and supports the well-being of all Americans.”

Board of Governors of the Federal Reserve member Lisa Cook speaks at the Federal Reserve in September 2022 in Washington.

President Donald Trump confirmed that he will fire embattled Federal Reserve Governor Lisa Cook if she doesn’t step down first.

“What she did was bad, so I’ll fire her if she doesn’t resign,” Trump said at the White House Friday.

Trump had previously called on Cook to resign but had not publicly stated that he would fire her.

Although the Fed is an independent government body, the president can fire a Fed official for cause, but that action would be highly unusual.

Federal Housing Finance Agency Director Bill Pulte, a Trump appointee and frequent attack dog on Fed Chair Jerome Powell and the central bank, has said that Cook claimed two properties — a home in Michigan and a condo in Atlanta — as her primary home addresses. On Friday, Pulte also claimed she may have improperly documented a third residence. But the evidence against Cook remains unclear.

A Justice Department official is set to probe Cook for potential mortgage fraud, according to a letter viewed by CNN.

Shipping containers are seen on a ship at the Port of Oakland on August 1 in Oakland, California.

While markets cheered Federal Reserve Chair Jerome Powell as he opened the door to a rate cut as soon as next month, he also warned of a gloomier economic outlook, in part because of tariffs.

Citing recent inflation data, Powell said, “Higher tariffs have begun to push up prices in some categories of goods.” And unlike recent months, he seemed more convinced than ever that the effects of tariffs are “clearly visible.”

“We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts,” he added in his Jackson Hole address Friday.

But it remains to be seen whether prices will move higher and more or less stay there, or lead to more persistent recurring price increases, he said.

Bonds rallied and Treasury yields fell sharply Friday as traders digested Federal Reserve Chair Jerome Powell’s remarks.

The 2-year, 10-year and 30-year Treasury yields all fell as investors snapped up bonds to lock in high rates ahead of a potential Fed rate cut in September.

Yields and prices trade in opposite directions. If the Fed is expected to cut rates, investors will snap up bonds to secure the current high rates, pushing yields lower.

“Stocks are surging and the yield curve is plunging as Chair Powell points to potential rate cuts around the corner,” José Torres, senior economist at Interactive Brokers, said.

Traders are now pricing in an 87% chance the Fed cuts rates in September, up from a 75% chance before Powell began his remarks.

Investors can also flock to bonds in a flight to safety due to concerns about economic weakness.

An exterior view at the New York Stock Exchange on August 4, 2025, in New York City.

Stocks jumped higher Friday morning as traders cheered signals from Federal Reserve Chair Jerome Powell’s remarks that the central bank might cut interest rates in September.

The Dow rose 680 points, or 1.5%. The broader S&P 500 rose 1.3% and the tech-heavy Nasdaq Composite gained 1.35%.

“Downside risks to employment are rising,” Powell said in his remarks. “And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

“The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said.

While potential rate cuts are a response to slowing growth in the labor market, the stock market nonetheless cheered the potential for lower borrowing costs.

The Dow was on track to close at its first record high since December 4.

The Fed has held its benchmark interest steady since December. A Fed rate cut would lower savings and borrowing rates, boosting spending and investing while stimulating business activity, creating a sustained tailwind for the stock market. A rate cut can also lower bond yields, making higher-yielding assets like stocks more appealing for investors.

The job market is on such shaky ground that the Federal Reserve may soon need to cut interest rates to support the economy, Fed Chair Jerome Powell said Friday at a key central banking forum.

In one of his most consequential speeches, Powell suggested the labor market could benefit from lower rates, which the Fed has kept unchanged for eight straight months.

“Downside risks to employment are rising,” Powell said in prepared remarks for his keynote speech at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyoming. He said the possibility of Trump’s tariffs having only a short-lived effect on inflation is “reasonable.”

“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he added.

Read more here.

Jerome Powell speaks Friday at a central banking symposium in Jackson Hole, Wyoming.

Federal Reserve Chair Jerome Powell cautioned Friday that the labor market is in a “curious state of balance” — one where both supply and demand of workers are slowing — and that’s putting it in a more precarious state than the low unemployment rate portrays.

Despite slowing job growth, the US unemployment rate has remained low.

“This unusual situation suggests that downside risks to employment are rising,” Powell said during his annual monetary policy address in Jackson Hole, Wyoming. “And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

The July jobs report showed that employment gains have slowed much more than previously thought; however, despite tepid job growth last month, the jobless rate remained relatively low.

The unemployment rate ticked up to 4.2% from 4.1% in June, as the labor force continued to contract amid what Powell described as a “sharp falloff in immigration.”

There is one key sentence in Federal Reserve Chair Jerome Powell’s latest speech that will almost certainly get Wall Street’s attention.

Powell on Friday delivered a keynote address at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming. It’s known for being the Fed chair’s definitive signal on what monetary policy may look like in the months ahead.

Powell went into detail on how the labor market might now be shaky ground and how the impact of President Donald Trump’s tariffs might possibly have only a limited impact on consumer inflation. Then he summed up what that all that means for interest rates.

In other words: A rate cut is probably coming soon.

One big question, among many swirling around at the Jackson Hole conference, is whether the Federal Reserve will lower interest rates at its monetary policy meeting next month.

At least one official who will be voting at the meeting, Boston Fed President Susan Collins, is not yet ready to cut, she said Friday.

Collins believes inflation will be elevated into early next year, partly due to tariffs, she said Friday in a Bloomberg TV interview from Jackson Hole, Wyoming. “I don’t rule out a larger and more persistent impact,” she said.

“At the moment, monetary policy is kind of modestly restricted. That’s actually appropriate for a period when inflation is elevated,” Collins added.

Traders work on the floor of the New York Stock Exchange on August 15.

Stocks opened higher on Friday with just about 30 minues to go until Federal Reserve Chair Jerome Powell’s highly anticipated speech in Jackson Hole, Wyoming.

The Dow rose 300 points, or 0.68%. The broader S&P 500 rose 0.29%. The tech-heavy Nasdaq Composite was flat.

The Dow has posted a gain or loss of less than 0.1% in five out of the past six trading days. The blue-chip index needs to finish the day with a gain of roughly 229 points, or 0.51%, to notch a record high.

“There are no data releases today, and all eyes will be on Fed Chairman Powell’s speech this morning,” John Canavan, lead analyst at Oxford Economics, said in a note.

“Neutral” was the sentiment driving markets on Friday morning, according to CNN’s Fear and Greed index.

Traders on Friday morning were pricing in a 71% chance that the Fed cuts rates in September. That’s down from an 85% chance one week ago.

Federal Reserve Chair Jerome Powell during a hearing before the Senate Committee on Banking, Housing, and Urban Affairs on June 25.

Barring pandemic years, each August since 2018, Federal Reserve Chair Jerome Powell has traveled to Jackson Hole, Wyoming, to deliver a keynote address, often setting the stage for crucial monetary policy course corrections ahead.

This year, however, will mark his last time traveling to the conference as Fed chair given his term in that position expires this coming spring. He’s serving a concurrent term as a governor, which expires in 2028.

Typically, Fed chairs resign as governors if they aren’t renominated by a president as chair. But Powell recently said he has yet to make a determination if he’ll do so.

Traders work on the floor at the New York Stock Exchange in New York City, on August 6.

Federal Reserve Chair Jerome Powell’s closely watched speech could provide signals about the central bank’s potential rate-cutting path:

From a valley tucked within the majestic Teton mountains, Federal Reserve officials are giving clues on where interest rates might be headed.

In July, Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman dissented with the central bank’s decisions to hold rates steady for the fifth time in a row, instead backing a quarter-point rate cut. They pointed to signs of weakness in the labor market as a key reason to lower rates now

They aren’t the only Fed officials raising that concern.

“The labor market has softened, and I would see additional slowing as unwelcome,” San Francisco Fed President Mary Daly wrote in a post on LinkedIn last week. “Once the labor market stumbles, it tends to fall quickly and hard.”

Some Fed policymakers are still on edge over the possibility of President Donald Trump’s tariffs not having a limited impact on inflation after all. The latest Producer Price Index, which measures the prices businesses pay their suppliers, came in much worse than economists had expected, surging 0.9% in July from the prior month.

“The last inflation report that came in, where you saw services inflation — which is probably not driven by the tariffs — really start shooting up,” Chicago Fed President Austan Goolsbee told Bloomberg on the sidelines of the Fed’s Jackson Hole conference. “It’s a dangerous data point, I’m hoping that that’s a bit of a blip.”

Boston Fed President Susan Collins, also on the sidelines of the conference, told The Wall Street Journal that it’d be appropriate to cut rates in September if the labor market weakens more than price pressures have picked up.

Both Goolsbee and Collins are able to vote on rate decisions this year.