Federal Reserve Chair Jerome Powell gave the strongest signal to date that the central bank will make a September rate cut in a speech Friday.

“The time has come for policy to adjust,” Powell said at the Federal Reserve Bank of Kansas City’s annual conference at Jackson Hole in Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”

Commercial real estate has been desperately waiting for rate drops in hopes of spurring activity after the Fed held its discount rate between 5.25% and 5.5% for over a year — the highest level in two decades.

Attention will likely now shift to how much the Fed will cut rates over the remainder of the year. Economists polled by Reuters last week are forecasting 25 basis point cuts at each of the three remaining Federal Open Market Committee meetings in 2024.

Powell did not detail how large a September cut might be or the timing of future cuts in his speech, but pointed to more stable inflation data and cooling labor market conditions as catalysts for policy change. The current rate gives the Fed room to respond to further weakening in the labor market, he said.

“We will do everything we can to support a strong labor market as we make further progress toward price stability,” Powell said.

Unemployment and inflation readings are going in opposite directions as the Federal Reserve attempts to balance its dual mandate of stable prices and maximum employment.

A weak July jobs report briefly sent markets spiraling, and the national unemployment rate has inched up, hitting 4.3% in July, the highest mark since October 2021. Meanwhile, the consumer price index, a key inflation indicator, rose 2.9% in July from a year earlier, the smallest year-over-year increase since March 2021.

“It seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon,” Powell said. “We do not seek or welcome further cooling in labor market conditions.”