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Federal Reserve Chairman Jerome Powell signaled a possible cut in interest rates in the near future, sending stocks soaring on Friday.

Speaking to a gathering of economists and central bankers in Jackson Hole, Wyo., Powell said current economic conditions, including a marked slowdown in job growth, suggest a downward adjustment in the Fed's benchmark rate may be warranted. 

Powell stopped short of promising a rate cut at the next Fed meeting in September, saying he and his colleagues will continue to monitor incoming data on both inflation and job growth. 

But the Fed chairman's tone was enough to rally investors, who were already betting the central bank would lower its benchmark rate when policymakers gather in three-and-a-half weeks. 

The Dow Jones Industrial Average jumped nearly 900 points or nearly 2% in the first hour after Powell's remarks. 

Economic outlook remains uncertain, Powell says

Powell noted President Donald Trump's tariffs are causing some price hikes but he added it's hard to know how big or long-lasting those increases will be. At the same time, Trump's crackdown on immigration is limiting growth in the workforce, so even with slower job growth, the unemployment rate has remained low.

The theme of this year's Jackson Hole meeting is "Labor Markets in Transition." Participants are exploring how an aging population and declining immigration will affect the workforce and how policymakers should respond. 

With more than 10,000 baby boomers retiring each day, and far fewer immigrants coming into the country, the U.S. workforce is expected to grow slowly or not at all.  

"While the labor market appears to be in balance, it's a curious kind of balance that results from a marked slowing in both the supply of and demand for workers," Powell said. "This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly, in the form of sharply higher layoffs and rising unemployment." 

Lowering interest rates could serve to prop up the job market,

although it can also potentially lead to higher inflation. 

Trump has been waging a high-pressure campaign aimed at forcing the central bank to lower rates. He's repeatedly criticized Powell for not acting sooner. And on Friday, he even threatened to fire another Fed governor, Lisa Cook, after 

a Trump ally accused Cook of making false statements

"I'll fire her if she doesn't resign," Trump told reporters.  

Under federal law, designed to insulate the central bank from political pressure, Fed governors can only be removed "for cause."

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Scott Horsley

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Federal Reserve chairman Jerome Powell signaled a possible interest rate cut in the months to come, sending stocks sharply higher.

Fed Chair Jerome Powell signals possible rate cut, sending stocks sharply higher

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