Federal Reserve Mouthpiece: Powell's Shift Suggests Rate Cuts Are Approaching

ChainCatcher news, "Fed mouthpiece" Nick Timiraos pointed out in The Wall Street Journal that Federal Reserve Chairman Powell has made a subtle but important shift, bringing the Fed closer to a rate cut. He stated on Tuesday that further cooling of the labor market may be undesirable.

"High inflation is not the only risk we face," Powell said on the first day of his two-day testimony before the Senate Banking Committee on Tuesday. "We have seen the labor market cool significantly in many ways; it is no longer a source of broad inflationary pressure in the economy."

This assessment is noteworthy because Fed officials have long believed that an overheated labor market is the primary risk to the disinflation process.

Powell acknowledged that he would not have made such a judgment two months ago. In fact, his comments at a meeting in Portugal last week were more cautious before the U.S. Labor Department released the June employment report.