In his Jackson Hole speech, US Federal Reserve Chair Jerome Powell gave feeble hints that “policy adjustments” may occur in the coming months but warned that risks of higher inflation remain.

In his eighth and final speech as Fed Chair at the annual huddle, Powell highlighted the risks emanating from US tariffs and tighter immigration policies, which have raised the risk of inflation and a slowdown in labour force growth.

Let’s take a look at the Fed Chair’s remarks on inflation, rates, and the US economy.

Jerome Powell Jackson Hole Speech: Key takeaways

1. Labour market not flashing acute stress signals

Powell underscored that the jobs market slowdown is bigger than assessed earlier. He, however, added that weaker job growth hasn’t created much slack in the labour market. The unemployment rate is still historically low and has been stable for the past year.

Powell highlighted that other labour market indicators, such as quits, layoffs, the ratio of vacancies to unemployment, and nominal wage growth, are also little changed or have softened only modestly.

“The July employment report released earlier this month showed that payroll job growth slowed to an average pace of only 35,000 per month over the past three months, down from 168,000 per month during 2024. This slowdown is much larger than assessed just a month ago, as the earlier figures for May and June were revised down substantially,” said Powell.

“But it does not appear that the slowdown in job growth has opened up a large margin of slack in the labour market—an outcome we want to avoid. The unemployment rate, while edging up in July, stands at a historically low level of 4.2 per cent and has been broadly stable over the past year,” he said.

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