Recent remarks by Federal Reserve officials indicate that with the labor market slowing down, interest rates might be lowered later this year.

Mary Daly, President of the Federal Reserve Bank of San Francisco, stated at a forum in Hawaii that the timing and magnitude of interest rate adjustments will depend on upcoming economic data. She emphasized, "Policy adjustments are necessary, but we must avoid a labor market slowdown that leads to a recession."

The market crash in early August has increased the risk of recession and financial market disruptions. Federal Reserve officials have prepared for a 0.25% rate cut next month, but a more significant rate cut might be necessary if the labor market slows further.

Although the market expects the Federal Reserve to take action at its September meeting, an intermeeting rate cut is uncommon and usually occurs only when market functioning severely deteriorates.

Recent economic data show a cooling job market and rising unemployment rates, increasing market expectations for a more substantial rate cut.

Nevertheless, Federal Reserve officials believe they will not act swiftly due to short-term market fluctuations; they will wait for more data to determine the necessary policy support for the economy. Meanwhile, investor behavior indicates that the market has not experienced a large-scale flight to safe assets, with technical factors being more responsible for the sell-off.

Federal Reserve Chair Jerome Powell will speak at the Jackson Hole conference in Wyoming at the end of August, which will be an opportunity for him to elaborate on the Federal Reserve's policy outlook. This speech could significantly impact market sentiment as the economy and markets develop.

The Federal Reserve will decide whether more aggressive rate cuts are needed at the September meeting based on economic data and market performance in the coming weeks.