US Fed Chairman Jerome Powell is concerned about the sharp slowdown in job creation

Washington, October 14, 2025 – US Federal Reserve Chairman Jerome Powell warned on Tuesday that risks to employment had increased in recent months, noting that there had been a sharp slowdown in job creation in the world’s leading economy.

“Although the unemployment rate remained low in August, wage increases have slowed sharply, likely in part due to a decline in labor force growth due to lower immigration and labor force participation,” he told a conference in Philadelphia.

Economic growth appears to be holding up well, he added.

No official jobs data has been released for September due to the ongoing US government shutdown, but private sector figures indicate a marked slowdown in hiring last month.

In mid-September, Fed officials voted for a rate cut for the first time this year, overwhelmingly voting for a quarter-point rate cut to help support the weak labor market.

At the September meeting, Fed policymakers estimated an average of another 50 basis points of cuts this year, signaling additional steps in the bank’s two remaining rate decisions this year, in October and December. “In this less dynamic and somewhat softer labor market, downside risks to employment appear to have increased,” Powell said, noting that longer-term inflation expectations remained in line with the Fed’s two percent target. “Increasing downside risks to employment have changed our assessment of the balance of risks,” he said, adding that there was “no risk-free path for policy as we navigate the tension between our employment and inflation targets.”

The bank has a dual mandate from Congress to act independently to address both inflation and employment.

Futures traders currently see a more than 95 percent chance that the Fed will cut rates by an additional half percentage point this year, according to data from CME Group.

Powell also hinted on Tuesday that the Fed could soon stop reducing the size of its balance sheet, which ballooned in the early days of the Covid-19 pandemic as the US central bank tapped Treasuries and mortgage-backed securities (MBS) to support the economy.

“Our long-standing plan is to stop the balance sheet runoff when reserves are slightly above the level we believe is consistent with the loose reserve conditions,” he said. “We may be approaching that point in the coming months.”