Fed sound bite: Powell's one shift hints at approaching rate cuts

"Fed sounding board" Nick Timiraos article pointed out that Federal Reserve Chairman Jerome Powell said at a hearing on Tuesday that the trade-off between lowering inflation and maintaining a solid labor market is changing, a cautious but important shift that brings the Federal Reserve one step closer to cutting interest rates. "Rising inflation is not the only risk we face," Powell said. "We've seen the labor market cool significantly on a number of fronts. It's not the source of the inflationary pressures that are currently prevailing in the economy." That assessment is notable because Fed officials have long argued that an overheated labor market is the main risk to the process of depressing inflation. Powell acknowledged that just two months ago, he would not have made such a judgment. Indeed, Powell was also more circumspect in his comments at a conference in Portugal last week, ahead of the release of the U.S. Labor Department's June jobs report.