Federal Reserve Chair Jerome Powell described the central bank’s interest-rate stance as “still modestly restrictive” even after last week’s rate cut. That implied more wiggle room to reduce rates this year.

In other news, concerns about Federal Reserve independence have damped the U.S. dollar’s appeal as a hedge during turbulent times, according to Bank of Canada Gov. Tiff Macklem.

Chair Jerome Powell said he judged the Federal Reserve’s interest-rate stance as “still modestly restrictive” even after last week’s rate cut, implying more wiggle room to reduce rates this year if officials continue to judge that recent labor-market softness outweighs setbacks on inflation.

Powell, at a talk in Providence, R.I., on Tuesday afternoon, largely reiterated points he made at a press conference following last week’s rate cut. He highlighted how the Fed faces challenges in achieving both of its goals to keep inflation low and stable while promoting healthy labor markets.

China said it would no longer seek new special treatment for developing countries in current and future World Trade Organization negotiations, signaling a possible effort to ease a longstanding friction point with the U.S. ahead of a planned summit.

Chinese Premier Li Qiang announced the shift on Tuesday at a meeting of China’s Global Development Initiative on the sidelines of the United Nations General Assembly in New York, according to state-run Xinhua News Agency.

The move drew praise from WTO Director General Ngozi Okonjo-Iweala, who wrote on X that “this is a culmination of many years of hard work” and applauded China’s leadership.

Worries about the independence of the Federal Reserve have damped the U.S. dollar’s appeal as a hedge during turbulent times, Bank of Canada Gov. Tiff Macklem said Tuesday.

In both a speech and a press conference in Saskatchewan, Macklem said he expects the U.S. dollar to remain the global reserve currency for the foreseeable future. However, “President Trump’s repeated attacks on the Fed are a concern” because of the spillover to broader financial markets, the Canadian central banker said.

The Federal Reserve’s first interest-rate cut of the year gives its counterpart south of the border more room to continue reducing borrowing costs as it juggles with above-target inflation and a sluggish economy.

The Bank of Mexico is widely expected to lower its overnight interest-rate target from 7.75% to a three-year low 7.5% on Thursday in a 10th consecutive cut.

The central bank led by Gov. Victoria Rodríguez accelerated the easing path this year with four consecutive half-percentage-point cuts, despite the Fed’s reluctance to resume monetary easing.

The New Zealand government has appointed Anna Breman from Sweden’s central bank as the next governor of the Reserve Bank of New Zealand.

Breman has been deputy governor of Riksbank since 2019 and her appointment follows a global talent search that involved 300 candidates, said New Zealand Finance Minister Nicola Willis in a statement.

President Trump backed out of a planned meeting with Democrats as the country inched toward a government shutdown a week from now, with no negotiations set to find a way out of the impending crisis that would affect government services and hundreds of thousands of federal workers.

“After reviewing the details of the unserious and ridiculous demands being made by the Minority Radical Left Democrats in return for their Votes to keep our thriving Country open, I have decided that no meeting with their Congressional Leaders could possibly be productive,” Trump wrote on Truth Social on Tuesday.

The Fifth District Survey of Manufacturing Activity index dropped 10 points to minus 17 in September from minus seven in August, said the Richmond Fed, which compiles the survey. Economists polled by The Wall Street Journal had expected a shallower decline to minus 10.

The S&P Global Flash U.S. Composite PMI—a monthly gauge of activity in both the manufacturing and services sectors—fell back to 53.6 in September from 54.6 in August, according to the surveys published Tuesday. The reading above 50 suggests overall activity continued to expand, but at the slowest pace in three months.

The Swiss bank said Tuesday that the case stemmed from activities in the country between 2004 and 2012. UBS agreed to pay 730 million euros in fines and 105 million euros in civil damages to the French state, and is fully provisioned for the case, it said.

10 a.m.: New Residential Sales
4:15 p.m.: FRB San Francisco President Mary Daly speech on the U.S. economic outlook
7 p.m.: G77 Annual Meeting of Foreign Ministers
7 p.m.: ABA Economic Advisory Committee economic forecast

After voting for a supersize rate cut last week, Stephen Miran has now provided the intellectual cover for President Trump’s calls for drastically lower interest rates. If Miran is right, everyone else is wrong—not just the Federal Reserve, but investors and independent economists too, WSJ columnist James Mackintosh writes .

Miran, who joined the Fed board just before the rate cut and is on leave of absence as the head of Trump’s Council of Economic Advisers, wants rates almost 2 percentage points lower, at 2.5%—against the 4% to 4.25% range following last week’s reduction.

He set out his case in a speech on Monday, focused on changes made by the Trump administration. Lower immigration, less government borrowing and lower regulation all justify lower long-run rates, and he argues Trump is delivering all three. He plugs his estimates into the widely used Taylor monetary-policy rule to work out where current rates should be: a lot lower.

If he’s right, the markets need massive moves. If. Bonds, the currency and stocks would all need to adjust a lot to fall into line with an economy that, on Miran’s view, is struggling against a far-too-hawkish Fed.

The Federal Reserve exiting its restrictive monetary policy could dampen demand for the U.S. dollar, says Julius Baer's David Kohl in a note. "The sound economic justification for ending its restrictive policy stance implies further interest-rate cuts, a higher demand for risky assets, and a reduced demand for U.S. dollars," the chief economist says. Against the backdrop of weaker job growth and considerable risks to employment, Fed policymakers perceive less risk of inflation than at previous meetings since December 2024, he says. "We agree that the risk of further inflation is limited due to weak domestic demand and slower income growth," Kohl says. — Emese Bartha

• Confidence among German businesses fell back for the first time this year, according to a survey that adds to worrying signs for Europe’s most important economy. The Ifo Institute said Wednesday that its business-climate index declined to 87.7 in September from 88.9 last month. That decrease breaks a streak of gradually improving sentiment among German companies unbroken since the start of 2025, and overturns economists’ expectations for a further uptick in the index.
• Inflation pressures are once again building in Australia, with a monthly reading of price pressures hitting its highest level in just over a year in August. The monthly consumer-price index indicator rose 3.0% in the 12 months to August, according to data from the Australian Bureau of Statistics on Wednesday. Economists had expected an annual reading of 2.9%, following a significant rise in July.
• The Bank of England's slower pace of quantitative tightening is at best "a temporary and indirect palliative" to the U.K. gilt market, Bank of England chief economist Huw Pill said in a speech at the Inaugural Pictet Research Institute Symposium on Tuesday. The BOE last week reduced the pace at which it winds down gilt holdings—known as quantitative tightening—to 70 billion pounds over the next 12 months, from 100 billion pounds previously. (Dow Jones Newswires)

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.