Federal Reserve Chairman Jerome Powell indicated that a rate cut in December is not guaranteed, impacting risk assets. Speaking at a press conference, Powell noted that while the economy is expanding moderately and the labor market is cooling, inflation remains slightly elevated. He highlighted that the recent government shutdown could temporarily hinder economic activity, with increased downside risks to employment. Powell emphasized the need to manage inflation risks, stating that while long-term inflation expectations align with targets, recent expectations have risen due to higher tariffs. He acknowledged that the impact of tariffs on inflation is likely temporary. Powell also mentioned that the Fed's decision on balance sheet reduction aims to allow market adjustment, as money market liquidity has tightened recently. Nick Timiraos commented that the FOMC does not support the market's high expectation of a December rate cut, suggesting the Fed seeks policy flexibility.