The Federal Reserve is prepared to lower interest rates, confident that inflation is returning to normal levels and apprehensive of any further weakening in the economy.

“The time has come for policy to adjust,” Fed Chair Jay Powell said at the Jackson Hole Symposium in Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”

Powell did not provide a schedule or projection for how much the FOMC was planning to cut interest rates. However, his comments got as near as possible to setting up an interest rate cut at the Fed’s next policy meeting in September.

Powell’s speech stressed concerns about the recent softening in the labor market. “We do not seek or welcome further cooling in labor market conditions,” Powell said, adding that the slowdown in the labor market was “unmistakable.”

Since the Fed’s last meeting in July, job data have come in below expectations, and the government revised down labor market estimates for 2023 and early 2024 earlier this week.

“The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions.”

Powell also acknowledged recent progress on inflation, which has resumed moderating in recent months after stalling earlier in the year. “My confidence has grown that inflation is on a sustainable path back to 2%,” he said.