Federal Reserve Chair Jerome Powell used his annual address at the Jackson Hole symposium on 22 August to signal that the central bank could lower interest rates as soon as next month. “The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he said, adding that policy remains “in restrictive territory.” Powell drew attention to what he called an “unusual” labour-market balance created by a sharp slowdown in both the supply of and demand for workers. Non-farm payrolls have averaged just 35,000 a month over the past three months after sizeable downward revisions, while the jobless rate is stable at 4.2%. He warned that downside risks to employment are increasing and could translate quickly into higher layoffs if conditions deteriorate. The Fed chair acknowledged that tariff-driven price increases are “now clearly visible.” Personal-consumption-expenditure prices rose 2.6% in the year to July, with core inflation at 2.9%. Powell called it “reasonable” to expect the tariff impact to be short-lived but pledged that policymakers “will not allow a one-time increase in the price level to become an ongoing inflation problem.” Alongside the speech, the Federal Open Market Committee unanimously adopted a revised Statement on Longer-Run Goals, dropping the flexible average-inflation-targeting regime introduced in 2020 and removing explicit references to the zero lower bound. The new framework returns to flexible inflation targeting and underscores the Fed’s readiness to act “forcefully” to keep long-term inflation expectations anchored. Interest-rate futures quickly priced in a high probability of a 25-basis-point cut at the 17 September meeting, while equity indices erased earlier losses. The Fed last held its target range at 4.25%–4.50% on 31 July.