Jerome Powell speech LIVE: Powell signals more rate cuts, flags slower hiring as risk to economy

Federal Reserve Chair Jerome Powell highlighted a growing risk to the US economy: a sharp slowdown in hiring. Speaking at the National Association for Business Economics annual meeting in Philadelphia, Powell indicated that the Fed is likely on track to implement two more quarter-point interest-rate cuts this year.

“The outlook for employment and inflation does not appear to have changed much since our September meeting,” Powell said, noting that the federal government shutdown has temporarily limited access to official economic data.

At the September meeting, the Fed reduced its key interest rate for the first time this year and projected two additional cuts in 2025.

Federal Reserve Bank of Boston President Susan Collins noted the challenges in interpreting recent hiring trends, pointing out that slower job growth could reflect either reduced labor demand or a lower supply of workers due to a sharp decline in immigration.

She said, “The level of monthly job growth needed to keep the unemployment rate stable could be just 40,000 going forward, compared with about 80,000 before the pandemic.”

The Boston Fed president projected a “relatively modest increase” in the unemployment rate this year and early in 2026, but remains optimistic that hiring will accelerate once uncertainty around tariffs and economic conditions eases.

Federal Reserve Bank of Boston President Susan Collins called for continued easing of interest rates this year to bolster the labor market, while maintaining a level high enough to keep inflation under control.

“With inflation risks somewhat more contained, but greater downside risks to employment, it seems prudent to normalize policy a bit further this year to support the labor market,” Collins said in prepared remarks for an event at the Boston Fed.

She added, “Even with some additional easing, monetary policy would remain mildly restrictive, which is appropriate for ensuring that inflation resumes its decline once tariff effects filter through the economy.”

Fed chair Jerome Powell emphasized that the central bank’s assessment of the balance of risks has changed in recent months.

“Rising downside risks to employment have shifted our assessment of the balance of risks,” he said, adding that “there is no risk-free path for policy as we navigate the tension between our employment and inflation goals.”

Despite the softer labor conditions, Jerome Powell noted that economic growth continues to hold up well.

“In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen,” he said.

Federal Reserve Chair Jerome Powell warned that the U.S. labor market is showing signs of cooling, even as unemployment remains low.

“While the unemployment rate remained low through August, payroll gains have slowed sharply,” Powell said at a conference in Philadelphia. He attributed part of the slowdown to lower immigration and a decline in labor force participation, which have curbed labor force growth.

Federal Reserve Chair Jerome Powell defended the central bank’s use of interest payments on commercial banks’ reserves as a crucial tool for implementing monetary policy. Speaking amid scrutiny from some Washington lawmakers, Powell emphasized that the mechanism allows the Fed to “appropriately” calibrate its policy stance.

Powell noted that the tool was approved nearly two decades ago to support the financial system and played a critical role during the Global Financial Crisis. He described it as integral to the Fed’s ability to control short-term interest rates, ensuring stability in financial markets.

“If our ability to pay interest on reserves and other liabilities were eliminated, the Fed would lose control over rates,” Powell said. “The bottom line is that our ample reserves regime has proven remarkably effective for implementing monetary policy and supporting economic and financial stability.”

Fed officials are divided on debate over how low bank reserves can go without triggering market volatility.

Fed Vice Chair for Supervision Michelle Bowman’s view: Advocates for the smallest possible balance sheet, keeping reserves closer to scarce than ample.

Governor Christopher Waller’s view: Suggests an optimal reserve level of around $2.7 trillion.

Federal Reserve Chair Jerome Powell announced on Tuesday that the central bank is concluding its prolonged process of reducing its holdings, commonly referred to as quantitative tightening.

Powell mentioned that, as of now, no government economic data has been issued because of the federal shutdown, “available evidence suggests that both layoffs and hiring remain low, and that both households’ perceptions of job availability and firms’ perceptions of hiring difficulty continue their downward trajectories.”

Futures traders currently estimate over a 95% probability that the Fed will reduce rates by another half percentage point this year, AFP reported citing data from CME Group.

"Both supply and demand in the labour market have come down so sharply, so quickly," Powell said.

"The fact that the unemployment rate has barely moved is kind of remarkable in and of itself, and suggests that they're moving at roughly the same pace, although, of course, the unemployment rate has ticked up, which suggests that demand is moving a little faster than supply," he added.

Gold hit a new all-time high above $4,100 on Tuesday, boosted by expectations of a U.S. Federal Reserve rate cut this month and a flight to safety among investors due to rising trade tensions between Washington and Beijing, Reuters reported.

"Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago," Fed Chair Jerome Powell said.

Powell reaffirmed his earlier message from the September meeting, indicating that the Fed is now more concerned about the job market than its primary goal of price stability.

“We're still at abundant reserves, meeting above our goal of ample reserves, a little bit above ample reserves,” Powell said.

Federal Reserve Chair Jerome Powell stated Tuesday that a significant slowdown in hiring presents an increasing threat to the U.S. economy, indicating that the Fed probably will reduce its key interest rate two more times this year, AP reported.

Powell said that “the outlook for employment and inflation does not appear to have changed much since our September meeting,” when the Fed cut its key rate for the first time this year.

Opening up on the current immigration policies, Powell said, “Let me start by saying that we don't, we don't have a view on immigration. It's not our job to have a view. So we take that as completely. You know it is what it is, as we take it as it arrives, more, I'd say, stronger policy than most people had expected. We've seen, you know, a very sharp decline in growth of the labour force and in people entering the country, and yeah, I think you're only beginning to see the strength of that policy too.”

Responsing on receiving political criticism, Powell said, “So the main thing we can continue to do is to do our work the way we've always done it, which is, you know, think really carefully about evolving economic conditions and the evolving outlook and the balance of risks, and try to make good decisions to to best serve, you know, the American public and and then explain those decisions and talk about them in a way that that makes sense and is grounded in the data.”

No official employment data for September has been released due to the US government shutdown, but private sector numbers indicate a significant slowdown in hiring last month, Powell noted.

“Rising downside risks to employment have shifted our assessment of the balance of risks,” Powell said.

“Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” Powell said.

Speaking on the rising role of AI, Powell said, “We're doing what other people are doing, which is, you know, reading all the things that I mean, so many researchers are working on AI. Now, it's just amazing. And so we follow all of that. We also have people at the Fed who are doing lots and lots of research on AI. And you know, in terms of, it's just such early days to be looking for the kind of things that will happen.”

The Federal Reserve has other data beyond government sources to use, says Powell.

Powell said that “the outlook for employment and inflation does not appear to have changed much since our September meeting,” when the Fed reduced its key rate for the first time this year.

Fed officials last month indicated that the central bank would cut its rate two more times this year and once in 2026.

In mid-September, Fed officials voted to reduce interest rates by a quarter point for the first time this year, aiming to bolster the struggling labour market.

Powell mentioned that no official jobs data for September has been released because of the ongoing US government shutdown, but private sector figures indicate a significant slowdown in hiring last month.

"While the unemployment rate remained low through August, payroll gains have slowed sharply, likely in part due to a decline in labour force growth due to lower immigration and labour force participation," Powell said.

"In this less dynamic and somewhat softer labour market, the downside risks to employment appear to have risen," Powell said, noting that inflation expectations over the longer term stayed in line with the Fed's two per cent target.

"While the unemployment rate remained low through August, payroll gains have slowed sharply, likely in part due to a decline in labour force growth due to lower immigration and labour force participation," Powell said.

Rising risks to job market justified September interest rate cut

Jerome Powell speech LIVE: Fed Chair Jerome Powell addresses at the National Association for Business Economics annual meeting in Philadelphia at 12:20 pm New York time, marking his final scheduled remarks before the Fed's upcoming meeting.