Federal Reserve's Powell Signals Potential Rate Cuts Amid Economic Concerns

Federal Reserve Chair Jerome Powell has cautioned Congress about the risks of maintaining high interest rates for too long, highlighting the threat to economic growth and job opportunities. Powell's focus on balancing policy to prevent weakening economic activity and employment comes as the US job market cools and inflation remains elevated.

Recent data indicating slowing job growth and persistently high prices has led to speculation that the Fed may be nearing a decision to cut interest rates. Analysts are now predicting the possibility of up to three rate cuts this year, driven by rising unemployment and falling inflation, urging the Fed to act sooner rather than later to address economic strains.

As the unemployment rate in the US nears a key recession indicator, the pressure on the Federal Reserve to cut rates increases, with odds of a September rate cut standing at 72%. Powell's emphasis on the need for 'more good data' before a rate cut underscores the central bank's cautious approach amid cooling inflation pressures and weakening job market indicators.