Federal Reserve Chair Jerome Powell suggested Tuesday that the central bank may be on track to lower its interest rate target range again in 2025.
Powell said in a speech at an event hosted by the National Association for Business Economics that based on data currently available amid the ongoing government shutdown, “it is fair to say that the outlook for employment and inflation does not appear to have changed much” in the past four weeks. His comments appear to signal that the Fed is on track to make more rate cuts in the future after lowering its target range in September. (RELATED: Fed’s Daly Warns ‘Softening’ US Job Market May Soon Become ‘More Worrisome’)
Though, Powell said that economic data available before the start of the shutdown indicates that “growth in economic activity may be on a somewhat firmer trajectory than expected.” The Fed chairman also stressed that the “downside risks to employment appear to have risen” amid a somewhat softening labor market.
“While the unemployment rate remained low through August, payroll gains have slowed sharply, likely in part due to a decline in labor force growth due to lower immigration and labor force participation,” Powell said. “In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen. While official employment data for September are delayed, available evidence suggests that both layoffs and hiring remain low, and that both households’ perceptions of job availability and firms’ perceptions of hiring difficulty continue their downward trajectories.”
Federal Reserve Chair Jerome Powell delivers opening remarks remotely at the Federal Reserve Board’s Community Bank Conference at the Federal Reserve Board headquarters in Washington, DC, on October 9, 2025. (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
Powell also warned that there is no “risk-free path for policy” for the Fed to take as it continues to navigate the “tension” between its goals related to employment and inflation.
“Rising downside risks to employment have shifted our assessment of the balance of risks. As a result, we judged it appropriate to take another step toward a more neutral policy stance at our September meeting,” Powell said.
“I will stress again that these projections should be understood as representing a range of potential outcomes whose probabilities evolve as new information informs our meeting-by-meeting approach to policymaking,” he continued. “We will set policy based on the evolution of the economic outlook and the balance of risks, rather than following a predetermined path.”
In September, Powell similarly asserted that the central bank is currently facing a “challenging situation” due to inflation risks and recent weak employment data.
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