Powell Warns More US Interest Rate Cuts Are Far From Certain

What’s Happened Recently

In its latest move, the **Federal Reserve** cut the benchmark interest rate by **0.25 percentage points** to a range of **4.00–4.25%**, marking the first such cut since December. The decision comes amid signs that the **labour market is weakening**, while inflation continues to stay above the Fed’s 2% target.

“Challenging Situation”: Inflation vs Employment

Fed Chair **Jerome Powell** emphasized that policymakers are in a difficult balancing act: on one hand the risk of inflation remaining elevated (partly driven by recent tariffs), on the other hand the danger that keeping rates too high for too long will cause the **labour market to soften unnecessarily**. Powell warned that if the Fed “eases too aggressively,” it could undermine inflation control and later have to reverse course.

What’s Next: Are Additional Rate Cuts Likely?

• Mixed expectations among Fed members: While many anticipate two more quarter-point rate cuts before the end of 2025, others urge caution or even prefer holding rates steady.
• Inflation remains a concern: Despite recent rate cuts, prices continue rising above the 2% goal. Tariffs are expected to sustain some upward pressure on consumer goods.
• Labour market signals weakens: Employment data show signs of growth slowing, which could shift the policy focus more toward protecting jobs.
• No commitment yet: Powell made it clear that any future cuts aren't locked in. It depends on incoming data on inflation and jobs.

What This Means for Markets & Policy

Financial markets, economists, and investors are now closely watching upcoming employment reports, CPI (Consumer Price Index) readings, and trade/tariff developments. These data points will help decide whether a **gradual path of easing** is feasible without compromising inflation targets. If inflation spikes again or labour market weakness becomes more pronounced, the Fed may delay cuts or even consider reversing some decisions.

Conclusion: Uncertainty Ahead

In summary, while many in the market have expected further **US interest rate cuts** by year-end, Chair Powell’s comments make it clear that such cuts are not guaranteed. The Fed is navigating a tightrope between controlling inflation and safeguarding employment. For those tracking monetary policy, the message is: stay tuned, be data-driven, and be prepared for surprises.