U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC.\u00a0<\/p>\n
Win Mcnamee | Getty Images<\/p>\n
U.S. economic activity and employment were mostly little changed or unchanged in recent weeks, while prices\u00a0rose moderately or modestly, the Federal Reserve said on Wednesday, a mixed report that on the margin appeared to\u00a0underscore\u00a0why an increasing number of central bank policymakers have signaled their openness to resuming\u00a0interest rate cuts\u00a0this month.<\/p>\n
“Contacts frequently cited economic uncertainty and tariffs as negative factors,” according to the Fed’s “Beige\u00a0Book” report, a snapshot of the nation’s economic health published two weeks ahead of\u00a0each central bank\u00a0policy meeting.\u00a0“Overall, sentiment was mixed among the (Fed) districts. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts.”<\/p>\n
After holding the policy rate steady in the 4.25%-4.50% range this year, Fed policymakers are now widely expected to lower short-term borrowing costs by a quarter of a percentage point at their September 16-17 meeting. Financial markets and analysts grew more confident in that view after Fed Chair\u00a0Jerome Powell\u00a0said last month that rising downside risks to the labor market may mean a rate adjustment is warranted, joining several other U.S. central bankers who have made a similar argument.<\/p>\n
Powell cited recent signs of weakness in the labor market data, including a government report\u00a0in early August\u00a0that showed job growth had fallen to a paltry monthly average of 35,000 since May, and a baseline outlook that President Donald Trump’s\u00a0tariffs\u00a0will only boost inflation temporarily.<\/p>\n
Powell also said he feels that labor market stability means the Fed can “proceed carefully,” a phrase understood to suggest gradual rate cuts.<\/p>\n