Federal Reserve officials are hinting that interest rates might be headed lower in the coming months. Despite holding rates steady for the fifth consecutive time, several Fed policymakers are sounding the alarm on weakness in the labor market. San Francisco Fed President Mary Daly warned that once the labor market “stumbles, it tends to fall quickly and hard.” Chicago Fed President Austan Goolsbee also expressed concern over rising inflation pressures, stating that a recent surge in services inflation may be a “blip.”
Boston Fed President Susan Collins suggested that a rate cut could be necessary if the labor market weakens more than expected. Her comments come as the Producer Price Index surged 0.9% in July, exceeding economists’ expectations. The Fed’s decision on interest rates is closely tied to these economic indicators.
Fed officials, including Governor Christopher Waller and Vice Chair Michelle Bowman, previously dissented from holding rates steady and instead advocated for a quarter-point rate cut. Their concerns over the labor market’s softening are shared by other policymakers, indicating that interest rates may be due for a change in the near future.
Source: https://edition.cnn.com/business/live-news/fed-powell-jackson-hole