Powell: Weakening job market and still-high inflation—no one’s talking about rate hikes now At the latest press conference, Powell pointed out that the U.S. labor market is experiencing a noticeable cooldown: hiring and layoffs are slowing down simultaneously, companies are finding it easier to recruit, households’ expectations for job opportunities are declining, and the unemployment rate has risen to about 4.4%. Job growth has weakened significantly compared to earlier this year, partly due to a slowdown in labor supply, including reduced immigration and lower participation rates. However, labor demand itself is also weakening. On inflation, core PCE year-over-year remains at 2.8%, above the long-term target of 2%. Inflation for some goods has risen due to tariffs, but service inflation continues to show signs of slowing. Although overall inflation has dropped significantly from its peak in 2022, it has not yet reached a level that would fully reassure the Fed. The FOMC has cut rates by another 25 basis points and initiated short-term Treasury purchases to maintain ample reserves and ensure the effective operation of policy rates. Powell emphasized that in the context of rising employment risks and still-high inflation, there is no “risk-free option” for policy paths. The Fed must strike a more precise balance under the constraints of its dual mandate. He stated that interest rates are now close to the neutral range, and future policy will not follow a preset direction but will be assessed meeting by meeting based on economic data and risk conditions.