Update News BD
By. Catarina Saraiva
September 18, 2025 at 12:00 AM GMT+6
Updated on September 18, 2025 at 2:47 AM GMT+6
"Jerome Powell speaks after the Fed rate cut, saying the U.S. jobs market is no longer very solid."
After Fed Rate Cut, Powell Says Jobs Market No Longer Very Solid
Introduction
The Federal Reserve (Fed), the central bank of the United States, has once again taken a significant step in shaping the direction of the global economy. In its latest policy meeting, the Fed announced a rate cut (interest rate reduction), signaling a shift in its monetary stance. While rate cuts are generally seen as supportive for investments, borrowing, and overall economic growth, Fed Chair Jerome Powell expressed concerns about the weakening jobs market.
His comments suggest that the U.S. economy may be entering a more fragile phase, where employment growth is slowing down, inflation remains a concern, and market confidence is being tested.
This article explores the Fed’s recent decision, Powell’s statements, the impact on the U.S. economy, the jobs market, and the broader market reaction that followed.
Federal Reserve and Its Role
The Federal Reserve is the most powerful financial institution in the United States, responsible for:
Setting monetary policy
Adjusting interest rates
Maintaining economic stability
When the Fed lowers rates, borrowing becomes cheaper for businesses and consumers. This often leads to increased spending, higher investment, and short-term economic growth.
Risks of Rate Cuts
Fueling inflation if demand rises too quickly
Sending signals that the Fed sees weakness in the economy
Powell’s comments highlight this tension—while the Fed wants to support growth, it is also acknowledging the challenges facing the labor market.
Why the Fed Cut Rates
1. Weakening Jobs Market
Powell openly admitted that the jobs market is “no longer very solid.” Employment growth is slowing, unemployment claims are rising, and wage growth is weakening.
2. Economic Slowdown
Consumer spending is softening, manufacturing is weak, and housing affordability remains low.
3. Inflation Concerns
Inflation still lingers above the Fed’s target, creating a difficult balancing act: stimulate growth without fueling higher prices.
4. Global Factors
Trade tensions, geopolitical instability, and slower global demand influenced the Fed’s proactive move.
Powell’s Comments on the Jobs Market
Jerome Powell’s remarks were the highlight of the announcement.
Job creation has slowed
Layoffs are increasing in technology and retail
Wage growth is flattening
This weakening jobs market reduces consumer confidence, household income, and long-term growth potential—even when borrowing costs are lower.
Impact on the U.S. Economy
Short-Term Boost
Cheaper loans may stimulate business expansion and household spending.
Inflation Pressure
More demand could push inflation higher again, forcing the Fed to act later.
Investor Confidence
Some investors welcome the cut, others fear it signals deeper weakness.
Housing Market
Lower mortgage rates might revive demand, but high property prices remain a barrier.
Employment Outlook
A weaker labor market risks slower wage growth and higher unemployment
Market Reaction
Stock Market – Rose initially but slowed after Powell’s cautious comments.
Bond Market – Treasury yields fell, showing expectations of more cuts.
Currency Markets – The U.S. dollar weakened slightly.
Global Markets – Central banks abroad may follow the Fed’s lead.
Inflation and Future Rate Decisions
Even though Powell did not stress inflation, it remains central to policy.
If Inflation Stays High
The Fed may pause or avoid more cuts.
If Inflation Falls
More rate cuts could follow to support growth.
Investors are watching closely to see if this is the start of a longer easing cycle.
Global Implications
Emerging markets may gain from capital inflows.
Global investors will shift portfolios based on Fed actions.
Other central banks might adjust their own rates to stay competitive.
Conclusion
The Federal Reserve’s rate cut reflects its attempt to balance growth and risks. Powell’s warning that the jobs market is “no longer very solid” underscores deeper economic concerns.
The coming months will determine if lower interest rates can support the economy without sparking inflation or job losses. The Fed’s strategy will be judged by how the labor market and inflation trends evolve.
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Fed Cuts Rates by Quarter-Point; Powell Cites Weakness in Jobs - Bloomberg https://share.google/XNjzjDenX5orvDabv
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