It is the strongest indication that Powell has given of a future rate cut recently, according to the news agency AP.
Powell has been hard-pressed by President Donald Trump, who time and again in harsh terms has attacked the Fed for not cutting the rate. The Fed chief has resisted and has maintained the importance of the central bank's independence in its decision-making.
The American market reactions to Powell's speech are positive. All three major stock indexes on the New York Stock Exchange are rising sharply. The Stockholm Stock Exchange is also climbing.
Warns of unemployment
Powell says at the same time that the effect of import tariffs on consumer prices is "now clear" and describes the uncertainty in the coming months as high, with a "shifting risk balance".
He also warns of increased unemployment and says that the labor market is in a "special situation" where both the supply and demand for labor have decreased.
At its meeting on July 30, the Fed decided to keep the rate in the range of 4.25-4.50 percent.
Rate cut likely
In its latest assessment, the market has priced in that the rate with a 75 percent probability will be cut by a quarter of a percentage point at the Fed meeting on September 17-18, reports CNBC.
The interest rate level is a heavy factor for the activity level on the market, partly because it becomes a price tag for taking risk.
Powell has been the head of the Federal Reserve (Fed) since 2018, and was nominated for the post by Trump during his first term in the White House, but his mandate expires in the spring. At the end of his speech, Powell expressed gratitude for being able to participate in the annual meetings in Jackson Hole.
