Fed’s Jerome Powell opens door to resume US interest rate cuts

August 24, 2025 6:58 pm
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Fed chair Jerome Powell on Friday signalled US interest rate cuts could come as soon as next month, suggesting a shift in policy may be needed to support the economy as evidence grows of a weakening labour market.

“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he said at the Jackson Hole economic symposium on Friday.

The symposium, hosted by the Kansas City Fed, is closely watched by investors and economists because the gathering offers Fed officials the opportunity to express their views on monetary policy.

Traders upped their bets of a September rate cut to roughly 90 per cent after Mr Powell’s speech, CME Group’s FedWatch tool showed.

“The bar for an earlier cut seems to be lower now given his description of the landscape,” former Fed governor Larry Meyer, who now runs LHMeyer/Monetary Policy Analytics, wrote to clients.

Mr Powell enters the final 10 months of his term as Fed chair facing an increasingly murky economic picture.

Unlike other central banks, the Federal Reserve has a dual mandate of promoting price stability and maximum employment. This complicates the puzzle currently facing Mr Powell.

The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate

Fed chair Jerome Powell

Cut rates too quickly and it could reignite an inflationary spike that has still not fully recovered from the post-pandemic price surge. Hold rates for too long and it could lead to a sharp increase in unemployment, pushing the economy into a recession.

“In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside – a challenging situation,” Mr Powell said. “When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.”

But Mr Powell’s high-stakes speech showed that he has since become more concerned over the jobs market since the Fed’s last rate meeting.

The July jobs report showed that job gains slowed to an average pace of roughly 35,000 per month over the last three months, a much larger slowdown than previously believed. He also noted changes to immigration policy has led to an “abrupt slowdown in labour force growth”.

This delicate balancing act comes as the Federal Reserve faces increasing pressure from US President Donald Trump as he seeks to exert more control over the institution.

Mr Trump has frequently denigrated Mr Powell and at times hinted at the idea of firing him – a never-before-tested manoeuvre that Mr Trump has since backed off on.

He has, however, sought to raise the stakes on Mr Powell in different ways. This included an almost unprecedented visit to the Fed’s headquarters last month, during which he criticised Mr Powell’s handling of the central bank’s costly renovation project.

The surprise resignation of one Fed governor also gave Mr Trump the opportunity to install a loyalist to the board on a temporary basis. The White House aims to fast-track Stephen Miran’s confirmation in time for the Fed’s September meeting.

Mr Trump on Friday also said he would also fire Fed governor Lisa Cook if she does not resign from the board. The threat comes a day after the Justice Department launched an investigation into Ms Cook, who has voted in line with Mr Powell on rate decisions, over allegations of mortgage fraud.

Ms Cook, whose term expires in 2038, has said she would not be “bullied” into stepping down.

Together they, along with a rotating group of regional fed bank presidents, make up the Federal Open Market Committee (FOMC) that sets its interest rates.

The FOMC held rates steady at 4.25 to 4.50 per cent last month, defying calls from Mr Trump to lower them. Two Fed members dissented, pointing to weakness in the labour market, although minutes released from the meeting earlier this week showed broad support to maintain their policy.

The UAE Central Bank, which follows Fed decisions, also held its base rate steady last month at 4.40 per cent.

Fed officials have signalled they intend to cut rates at some point this year. A dismal jobs report last month showed new signs of weakness in the labour market, which caused traders to up the probability of a rate cut in September.

“While the labour market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” Mr Powell said. “This unusual situation suggests that downside risks to employment are rising. And if those risks materialise, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

However, inflation is still running above the Fed’s long-term two per cent target. Underlying metrics also show that price pressures are beginning to creep into the economy through imported goods such as household furnishings, recreational goods and apparel.

“The effects of tariffs on consumer prices are now clearly visible,” Mr Powell said. “We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts.”

The Jackson Hole symposium, which features a bevy of speaking engagements by Fed officials, showcased the current divisions within the central bank.

Since he does not set rates unilaterally, Mr Powell will have to steer a divided Federal Open Market Committee to his preferred monetary policy direction.

Kansas City Fed president Jeffrey Schmid, who holds a vote on the committee this year, said he was cautious of cutting rates in September. He also suggested the August jobs report due on September 5 will be “very consequential”.

The cautionary tone was echoed by Chicago Fed president Austan Goolsbee and Cleveland Fed president Beth Hammack.

That appears to suggest Fed Governors Christopher Waller and Michelle Bowman – both under consideration to be the next Fed chair – remain outliers in calling for rate cuts next month. Mr Waller is due to provide his thoughts on the economic outlook next week.

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4.35pm: Tilal Al Khalediah
5.10pm: Continous
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7pm: Flood Zone
7.40pm: Straight No Chaser
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UAE currency: the story behind the money in your pockets
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Volvo ES90 Specs

Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)

Power: 333hp, 449hp, 680hp

Torque: 480Nm, 670Nm, 870Nm

On sale: Later in 2025 or early 2026, depending on region

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Ferrari 12Cilindri specs

Engine: naturally aspirated 6.5-liter V12

Power: 819hp

Torque: 678Nm at 7,250rpm

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On Women’s Day
What the law says

Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.

“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.

“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”

If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.

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Director: Shazia Iqbal

Starring: Siddhant Chaturvedi, Triptii Dimri

Rating: 1/5

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MATCH INFO

Uefa Champions League, last-16 second leg
Paris Saint-Germain (1) v Borussia Dortmund (2)
Kick-off: Midnight, Thursday, March 12
Stadium: Parc des Princes
Live: On beIN Sports HD

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Manikarnika: The Queen of Jhansi

Director: Kangana Ranaut, Krish Jagarlamudi

Producer: Zee Studios, Kamal Jain

Cast: Kangana Ranaut, Ankita Lokhande, Danny Denzongpa, Atul Kulkarni

Rating: 2.5/5

Mohammed bin Zayed Majlis
Lexus LX700h specs

Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor

Power: 464hp at 5,200rpm

Torque: 790Nm from 2,000-3,600rpm

Transmission: 10-speed auto

Fuel consumption: 11.7L/100km

On sale: Now

Price: From Dh590,000

Why are asylum seekers being housed in hotels?

The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.

A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.

Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.

The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.

When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.

War 2

Director: Ayan Mukerji

Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana

Rating: 2/5

PSL FINAL

Multan Sultans v Peshawar Zalmi
8pm, Thursday
Zayed Cricket Stadium, Abu Dhabi

Result
Qualifier: Islamabad United beat Karachi Kings by eight wickets

Fixtures
Tuesday, Lahore: Eliminator 1 – Peshawar Zalmi v Quetta Gladiators
Wednesday, Lahore: Eliminator 2 – Karachi Kings v Winner of Eliminator 1
Sunday, Karachi: Final – Islamabad United v Winner of Eliminator 2

SCHEDULE

December 8: UAE v USA (Sharjah Cricket Stadium)

December 9: USA v Scotland (Sharjah Cricket Stadium)

December 11: UAE v Scotland (Sharjah Cricket Stadium)

December 12: UAE v USA (ICC Academy Oval 1)

December 14: USA v Scotland (ICC Academy Oval 1)

December 15: UAE v Scotland (ICC Academy Oval 1)

All matches start at 10am

The five pillars of Islam
Red flags
  • Promises of high, fixed or ‘guaranteed’ returns.
  • Unregulated structured products or complex investments often used to bypass traditional safeguards.
  • Lack of clear information, vague language, no access to audited financials.
  • Overseas companies targeting investors in other jurisdictions – this can make legal recovery difficult.
  • Hard-selling tactics – creating urgency, offering ‘exclusive’ deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

Benefits of first-time home buyers’ scheme
  • Priority access to new homes from participating developers
  • Discounts on sales price of off-plan units
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  • Mortgages with better interest rates, faster approval times and reduced fees
  • DLD registration fee can be paid through banks or credit cards at zero interest rates
The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
The specs: 2018 Opel Mokka X

Price, as tested: Dh84,000

Engine: 1.4L, four-cylinder turbo

Transmission: Six-speed auto

Power: 142hp at 4,900rpm

Torque: 200Nm at 1,850rpm

Fuel economy, combined: 6.5L / 100km

Results

2.30pm Maiden (PA) Dh40,000 1,200m

Winner Lamia, Tadhg O’Shea, Ernst Oertel.

3pm Handicap (PA) Dh40,000 1,000m

Winner Jap Al Afreet, Elione Chaves, Irfan Ellahi.

3.30pm Handicap (PA) Dh40,000 1,700m

Winner MH Tawag, Bernardo Pinheiro, Elise Jeanne.

4pm Handicap (TB) Dh40,000 2,000m

Winner Skygazer, Sandro Paiva, Ali Rashid Al Raihe.

4.30pm The Ruler of Sharjah Cup Prestige (PA) Dh250,000 1,700m

Winner AF Kal Noor, Tadhg O’Shea, Ernst Oertel.

5pm Sharjah Marathon (PA) Dh70,000 2,700m

Winner RB Grynade, Bernardo Pinheiro, Eric Lemartinel.

World record transfers

1. Kylian Mbappe – to Real Madrid in 2017/18 – €180 million (Dh770.4m – if a deal goes through)
2. Paul Pogba – to Manchester United in 2016/17 – €105m
3. Gareth Bale – to Real Madrid in 2013/14 – €101m
4. Cristiano Ronaldo – to Real Madrid in 2009/10 – €94m
5. Gonzalo Higuain – to Juventus in 2016/17 – €90m
6. Neymar – to Barcelona in 2013/14 – €88.2m
7. Romelu Lukaku – to Manchester United in 2017/18 – €84.7m
8. Luis Suarez – to Barcelona in 2014/15 – €81.72m
9. Angel di Maria – to Manchester United in 2014/15 – €75m
10. James Rodriguez – to Real Madrid in 2014/15 – €75m

If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).

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UAE currency: the story behind the money in your pockets
GAC GS8 Specs

Engine: 2.0-litre 4cyl turbo

Power: 248hp at 5,200rpm

Torque: 400Nm at 1,750-4,000rpm

Transmission: 8-speed auto

Fuel consumption: 9.1L/100km

On sale: Now

Price: From Dh149,900

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