Jay Pow­ell has opened the door to a Fed­eral Reserve interest rate cut in Septem­ber, as the cent­ral bank chair said a soften­ing US labour mar­ket could off­set risks that Don­ald Trump’s tar­iffs will hurt infla­tion.

“The baseline out­look and the shift­ing bal­ance of risks may war­rant adjust­ing our policy stance,” Pow­ell said at the Fed’s eco­nomic sum­mit in Jack­son Hole, Wyom­ing, yes­ter­day.

The remarks put Pow­ell in the camp of doves on the rate-set­ting Fed­eral Open Mar­ket Com­mit­tee and sig­nal that he could sup­port a quarter-point cut at the bank’s meet­ing next month.

US gov­ern­ment debt ral­lied strongly after his speech. The yield on the twoyear Treas­ury note fell 0.1 per­cent­age points to 3.69 per cent. The S&P 500 index jumped 1.6 per cent, while the dol­lar dropped about 0.9 per cent against a bas­ket of half a dozen peers.

The speech comes at a pivotal time for the Fed. The US pres­id­ent has launched a fierce cam­paign against Pow­ell and other top Fed offi­cials, insist­ing the cent­ral bank should drastic­ally cut rates.

The Fed has instead held its main rate at a 4.25-4.5 per cent range this year, fol­low­ing 1 per­cent­age point of cuts in 2024, as some offi­cials worry Trump’s tar­iffs on trad­ing part­ners will ignite a fresh surge in infla­tion.