Slowdown in US hiring suggests economy still needs rate cuts, Fed's Powell says

Economic Outlook - A sharp slowdown in hiring poses a growing risk to the U.S. economy, leading to expectations of two more interest rate cuts by the Federal Reserve this year [1][2] - The Fed's outlook for employment and inflation has not changed significantly since the September meeting, where the key rate was reduced for the first time this year [1][3] Interest Rate Projections - Fed officials forecast two additional rate cuts this year and one in 2026, which could lower borrowing costs for mortgages, car loans, and business loans [2][3] - Powell indicated that the central bank may soon halt the reduction of its $6.6 trillion balance sheet, which could impact long-term Treasury interest rates [4] Inflation and Employment Concerns - Powell expressed increased concern about the job market compared to inflation, noting that tariffs have raised the Fed's preferred inflation measure to 2.9%, but there are no broader inflationary pressures [3][6] - Rising downside risks to employment have shifted the Fed's assessment of the balance of risks [3] Criticism of Past Policies - Powell defended the Fed's bond purchases during the pandemic, which aimed to lower long-term interest rates and support the economy, despite facing criticism from Treasury Secretary Scott Bessent and others [5][6] - Critics argue that these bond purchases exacerbated inequality and delayed necessary rate increases as inflation began to rise in late 2021 [6]