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Federal Reserve Chair Jerome Powell announced a key interest rate cut last week, prioritizing weakening labor market conditions over persistent inflation. He acknowledged a challenging situation with upside inflation risks and downside employment risks, potentially indicative of stagflation. While expressing comfort with the current policy, Powell hinted at further cuts if needed. He noted a slowdown in labor market supply and demand, alongside cooling inflation, although still above the Fed's 2% target. Uncertainty remains due to tariffs and internal Fed divisions, with some officials advocating for a more aggressive approach.

Prepared by Christopher Adams and reviewed by editorial team.