Jerome Powell hints at more US Fed rate cuts amid jobs slowdown

Jerome Powell signalled more US Fed rate cuts are in the offing as a slowdown in jobs creation poses a growing risk to the US economy, AFP reported on Tuesday, citing written remarks by the chair of the US Federal Reserve.

Chair Jerome Powell has reiterated that the US Federal Reserve is slightly more worried about the job market than its other congressional mandate, which is to keep the US inflation in check. (Bloomberg)

Despite the US government shutdown cutting off official economic data, “the outlook for employment and inflation does not appear to have changed much since our September meeting,” when the US Fed reduced its key rate for the first time this year, Powell said before a meeting of the National Association of Business Economics in Philadelphia.

The US Fed is tipped to effect two interest rate cuts in 2025 and one more in 2026 — a move that would reduce the borrowing costs for homes to cars and businesses.

But on Tuesday, Powell reiterated that the US Fed is slightly more worried about the job market than its other congressional mandate, which is to keep the US inflation in check.

Tariffs have lifted the Fed's preferred measure of inflation to 2.9%, he said, but outside the duties there aren't “broader inflationary pressures” that will keep prices high. “Rising downside risks to employment have shifted our assessment of the balance of risks,” he said.

Separately, Powell spent most of his speech defending the Fed's practice of buying longer-term Treasury bonds and mortgage-backed securities in 2020 and 2021, which were intended to lower longer-term interest rates and support the economy during the pandemic.

Yet those purchases have come under a torrent of criticism from US Treasury Secretary Scott Bessent, as well as some of the candidates floated by Trump administration to replace Powell when his term as Chair ends next May.

With inputs from AP.