Federal Reserve Chairman Jerome Powell broadly hinted at the Fed’s annual conference at Jackson Hole, WY, that interest rates would soon be coming down.

Mr. Powell held back from explicitly endorsing a reduction in borrowing costs at the Fed’s next meeting in September. But his emphasis on the prospects of a weakening economic backdrop made clear that a cut is likely next month.

“The balance of risks appears to be shifting,” Mr. Powell said in his final speech as Fed chair at an annual conference hosted by the Reserve Bank of Kansas City in Jackson, Wyo. With borrowing costs weighing on the economy, the labor market softening and inflation risks contained, “the shifting balance of risks may warrant adjusting our policy stance,” said the chair.

Powell, who will cease to be the chairman of the Fed next year, although his 14-year term as a governor of the Fed ends in 2028, also made some other interesting observations.

Mr. Powell highlighted the recent slowdown in monthly jobs growth, but questioned whether it was a function of a pullback in demand from companies or a reduction in the supply of workers resulting from President Trump’s immigration crackdown. He said that left the labor market in a “curious kind of balance” that warranted caution.