Federal Reserve Chairman Jerome Powell hinted that interest rate reductions are on the horizon, as the central bank eyes softening in the labor market.

Powell, speaking on Friday in Jackson Hole, Wyoming, at a closely watched annual Fed symposium, discussed the current changing dynamics with inflation and the jobs market. Most investors anticipate that the Fed will move toward cutting its interest rate target soon, after holding it steady this year even under pressure from President Donald Trump.

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“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said.

Powell told the crowd that the Federal Open Market Committee is faced with a challenging task. Inflation is still too high, above the Fed’s 2% goal, and there are concerns about inflationary pressures. But at the same time, there are fears that the labor market might be starting to take a hit, putting the central bank in a complicated position.

“In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside — a challenging situation,” he said. “When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.”

The Fed has a dual mandate: Price stability, which it defines as keeping inflation near 2%; and full employment.

Generally, the Fed raises rates when it fears inflation is rising above the target.

But Powell said Friday that “downside risks to employment are rising.”

This story is breaking and will be updated.