Fed Chair Jerome Powell’s speech on Friday at this year's Jackson Hole Economic Policy Symposium balanced rising inflation risk against a fragile labor market, and the political calendar now raises the odds that his eventual successor will be less cautious on rates.

Powell’s message was deliberately sober.

He said the “effects of tariffs on consumer prices are now clearly visible” and will keep filtering through with uncertain timing. Headline PCE inflation ran 2.6% in July and core 2.9%, with goods prices flipping from last year’s declines to gains.

He framed the labor market as a “curious kind of balance,” with payroll growth slowing to about 35,000 a month in recent months from 168,000 in 2024 while unemployment sits at 4.2%.

Immigration has cooled, labor force growth has softened a

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