At the annual Jackson Hole Economic Symposium, Federal Reserve Chair Jerome Powell’s comments on a slowing U.S. labor market suggests a September interest rate cut of 25 basis points by the Fed may be likely. In fact, markets (as of 8/21/2025) are now pricing in over a 70% probability that the Fed will commence cuts in September and provide another cut in December.*
*Source: Bloomberg.
Despite upside risks to inflation from tariffs, the balance of risks appears shifting back to the labor side of the Fed’s dual mandate of stable inflation in the 2% area and maximum employment. Here is what Powell said on labor and inflation:
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