Jerome Powell, the head of the US central bank, has given a rocket boost to expectations that there will be an interest rate cut in September, a move President Trump has been demanding for months.
Speaking to central bankers gathered at Jackson Hole, Wyoming, Powell also argued that the inflationary impact of Trump's tariffs could prove temporary.
But he did not, as some had expected, address the additional challenges he has faced in recent months: the political pressure exerted on the US central bank, Trump's barrage of name-calling and demands for Powell to be removed from his post.
The shift to a more "dovish" stance, suggesting an easing of the cost of borrowing, sent share prices higher.
Economists and investors were already expecting borrowing rates to come down from their current 4.25 to 4.5% range. Recent weakness in the US jobs market raised those expectations further, but the impact on prices of Trump's sweeping tariffs had raised doubts.
