In a high-profile speech closely watched at the White House and on Wall Street, Powell said that there are risks of both rising unemployment and stubbornly higher inflation. Yet he suggested that with hiring sluggish, the job market could weaken further.

“The shifting balance of risks may warrant adjusting our policy stance,” he said, a reference to his concerns about weaker job gains and a more direct sign that the Fed is considering a rate cut than he has made in previous comments.

Still, Powell’s remarks suggest the Fed will proceed carefully in the coming months and will make its rate decisions based on how inflation and unemployment evolve.

“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said. That suggests the Fed will continue to evaluate jobs and inflation data as it decides whether to cut rates, including at its next meeting Sept. 16-17.

The stock market jumped in response to Powell’s remarks, with the broad S&P 500 index rising 1.4% in early trading.

Powell spoke with the Fed under unprecedented public scrutiny from the White House, as President Donald Trump has repeatedly insulted Powell and has urged him to cut rates, arguing there is “no inflation” and saying that a cut would lower the government’s interest payments on its $37 trillion in debt.

While Powell spoke, Trump told reporters in Washington, D.C. that he would fire Federal Reserve Governor Lisa Cook if she did not step down over allegations from an administration official that she committed mortgage fraud.

If Cook is removed, that would give Trump an opportunity to put a loyalist on the Fed’s governing board. The Fed has long been considered independent from day-to-day politics.

Powell spoke at the Fed’s annual economic symposium in Jackson Hole, Wyoming, a conference with about 100 academics, economists, and central bank officials from around the world. He was given a standing ovation before he spoke.

In his remarks, the Fed chair underscored that tariffs are lifting inflation and could push it higher in the coming months.

“The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts,” Powell said.

Inflation has crept higher in recent months though it is down from a peak of 9.1% three years ago. Tariffs have not spurred inflation as much as some economists worried but are starting to lift the prices of heavily imported goods such as furniture, toys, and shoes.

Consumer prices rose 2.7% in July from a year ago, above the Fed’s target of 2%. Excluding the volatile food and energy categories, core prices rose 3.1%.

Regarding the job market, Powell noted that even as hiring has slowed sharply this year, the unemployment rate remains low. He added that with immigration falling sharply, fewer jobs are needed to keep unemployment in check.

Yet with hiring sluggish, the risks of a sharper downturn, with rising layoffs, has risen, Powell said.

Powell added that higher prices from tariffs could cause a one-time shift to prices, rather than an ongoing bout of inflation. Other Fed officials have said that is the most likely outcome and as a result the central bank can cut rates to boost the job market.

Powell, however, suggested it is largely up to the Fed to ensure tariffs don’t lead to sustained inflation.

“Come what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem,” he said.

Powell also suggested the Fed would continue to make its decisions free from political pressure.

Fed officials “will make these decisions, based solely on their assessment of the data and its implications for the economic outlook and the balance of risks. We will never deviate from that approach.”