Federal Reserve Chair Jerome Powell strongly signaled support for additional interest rate cuts. In a public speech in Philadelphia on the 14th, Powell stated, “Through August, the unemployment rate remained low, but job growth has slowed sharply. This appears partly due to reduced labor force growth from declining immigration and lower labor market participation.”

He added, “In this less dynamic and somewhat weaker labor market, downside risks to employment seem to have increased. ”Regarding employment data, Powell noted, “The release of September’s jobs report from the Labor Department has been delayed, but available evidence suggests that layoffs and hiring remain low. Household perceptions of job availability and corporate views on hiring difficulties indicate a continued downward trend.

”On inflation, Powell explained, “With core goods prices rising faster than the decline in housing services prices, the 12-month core Personal Consumption Expenditures (PCE) price index rose 2.9% through August, slightly higher than earlier this year.”During the Q&A session, Powell remarked, “We are now at a point where a further reduction in job openings is highly likely to lead to rising unemployment. So far, it’s been a remarkable period where job openings dropped rapidly without unemployment rising, but we may now be reaching the point where unemployment starts to increase.

”The Financial Times (FT) interpreted Powell’s comments on increasing downside risks to employment as the strongest signal yet that Fed officials believe they have sufficient evidence to cut rates by an additional 0.25 percentage points. The Wall Street Journal (WSJ) noted that, despite lingering concerns about sticky inflation, Powell’s emphasis on labor market weakness has paved the way for a potential rate cut at the Federal Open Market Committee (FOMC) meeting scheduled for October 28-29

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