Fri, 22 Aug 2025

Fri, 22 Aug 2025 Fed chair Powell boosts expectation of US rate cut

Jerome Powell appeared to back a cut to borrowing rates and played down long term inflation risks in his annual speech at Jackson Hole.

* Jerome Powell, US central bank head, suggests interest rate cut in September.
* President Trump has been demanding a rate cut for months.
* Share prices rise as investors welcome Powell's "dovish" stance.
* Economists and investors already expected borrowing rates to come down from 4.25-4.5% range.
* Recent weakness in US jobs market raised expectations of a rate cut.
* Impact on prices of Trump's tariffs had raised doubts, but Powell says effects are now "clearly visible".
* He believes inflation will be "relatively short-lived" and downplays likelihood of embedded wage demands or higher inflation expectations.
* Interest rates were already considered restrictive, so adjusting policy stance may be warranted.
* Powell cautions against presuming a September rate cut is set in stone.
* Members of the Federal Reserve committee will make decisions based on data and economic outlook.
* Investors welcome speech, with main American share indexes rising 1.5% by end of trading day.
* Economists say a September rate cut now looks "almost nailed on", but higher job creation or price data could still delay it.
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