Fed's Shift: Prioritizing Jobs Over Inflation Amid Election Season

Federal Reserve Chair Jerome Powell signaled an upcoming interest rate cut, emphasizing the Fed's new focus on protecting the job market over fighting inflation. His remarks come weeks before a presidential election, marking a significant policy shift aimed at maintaining employment stability while inflation remains under control.

Federal Reserve Chair Jerome Powell made a significant announcement on Friday, signaling the U.S. central bank's readiness to pivot to interest rate cuts just weeks before the presidential election. This shift underscores the Fed's new priority: protecting the job market.

In a speech at the Kansas City Fed's annual Jackson Hole conference, Powell emphasized that it's time for policy adjustment. His remarks indicated that the central bank will likely start cutting rates in mid-September, about seven weeks before the November 5 election. This move marks a clear end to the Fed's inflationary fight, now focusing on safeguarding employment.

The decision has stirred political waters, with some Republicans, including former President Donald Trump, viewing it as a partisan move to boost the economy before the vote. However, Powell and other policymakers, like Fed Governor Christopher Waller, have steadily built consensus for a rate cut, citing reduced inflation and increased labor market risks.

(With inputs from agencies.)