The Big Story 

Federal Reserve Chair Jerome Powell said Friday the central bank faces “significant uncertainty” as it attempts to navigate the impact of President Trump’s policies, suggesting the bank could cut rates as the job market weakens.

© AP Photo

In remarks at the Fed’s annual summit in Jackson Hole, Wyo., Powell said the Fed needs to determine whether the impact of Trump’s tariffs, immigration restrictions and tax cuts will be temporary, or lead to permanent changes in the U.S. economy.

Even so, Powell said, the weakening of the U.S. labor market could push the Fed to slash interest rates at a point to be determined.

“There is significant uncertainty about where all of these polices will eventually settle and what their lasting effects on the economy will be,” Powell said.

The Fed, Powell said, is facing two conflicting trends: rising inflation, which would call for higher rates, and a weakening labor market, which would lend support for cuts.

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

Powell said that while the impact of Trump’s tariffs is “clearly visible,” it is not yet clear if they will lead to a one-time increase in prices or trigger a longer-term inflation surge.

“We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts,” Powell said.

Read more here.

Welcome to The Hill’s Business & Economy newsletter, I’m Sylvan Lane — covering the intersection of Wall Street and Pennsylvania Avenue.

Did someone forward you this newsletter? Subscribe here.

Essential Reads 

Key business and economic news with implications this week and beyond:

Dow hits record high as stocks rally on Powell speech, rate cut hopes

Trump says Canada will drop USMCA-compliant retaliatory tariffs

Trump says US will impose tariffs on all foreign furniture

Walmart hikes discounts for shoppers amid tariff uncertainty

The Ticker 

Upcoming news themes and events we’re watching:

In Other News 

Branch out with more stories from the day:

Wall Street soars on hopes for lower interest rates as the Dow surges 846 points to a record

NEW YORK (AP) — Wall Street rallied to its best day in months on Friday after the head of the Federal …

Good to Know 

Business and economic news we’ve flagged from other outlets:

What People Think 

Opinions related to business and economic issues submitted to The Hill: