Federal Reserve megaphone: Powell's shift hints that interest rate cuts are approaching

On July 10, the "Federal Reserve Messenger" Nick Timiraos article pointed out that Federal Reserve Chairperson Jerome Powell said at the hearing on Tuesday that the trade-off between reducing 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 have seen the labor market cooling significantly in many ways. This is not the source of general inflationary pressure in the economy right now." The assessment is noteworthy because Fed officials have long argued that overheating in the labor market is the main risk to the process of holding down inflation. Powell admitted that just two months ago, he would not have made such a judgment. In fact, Powell's comments at a conference in Portugal last week were also more cautious ahead of the Labor Department's June jobs report.