WSJ's Nick Timiraos: The balance of risks is changing for the Federal Reserve

Core Insights - The upcoming speech by the Fed chair is highly anticipated following a recent quarter-point rate cut, with expectations on how it will address economic outlook and monetary policy [1][2] - The debate around inflation and unemployment rates is central, with officials expressing concerns about inflation while acknowledging the changing balance of risks [4][6] - The Fed's ability to manage consensus on monetary policy is becoming more complex, influenced by trade policies and potential growth shocks [6][12] Economic Outlook - The market is focused on whether inflation will stabilize in the low 3% range or if unemployment will rise significantly [3] - There is a discussion on the sustainability of higher inflation, with some officials worried about inflation expectations becoming entrenched [7][10] - Consumer spending appears to be steady despite concerns about rising prices, indicating resilience in the economy [10][11] Fed's Policy Direction - The Fed is expected to continue cutting rates, with October seen as a likely time for further action based on recent comments from the chair [14] - The importance of the path of interest rates is emphasized, with expectations that the Fed will implement multiple cuts rather than a single adjustment [14][15] - Upcoming economic data, particularly employment reports, will be crucial in shaping the Fed's decisions before the next meeting [15]