Risks face the labor market and the inflation said the president of the US Federal Bank, Jerome Powellreiterating his view that policy makers are likely to have a difficult way ahead of them, as they weigh the possibility of further interest rates.
“The short -term risks to inflation are upward and the risks of employment downhill a difficult situation. The bilateral risks mean that there is no path without risks, “said Jerome Powell on Tuesday (23.9.25) in statements prepared for an event at the Greater Providence Chamber of Commerce in Rhodes Island.
Powell gave no suspicion of whether he could support a reduction in interest rates at the next Fed meeting in October, according to Bloomberg.
Powell’s comments looked very much like those he did at a press conference on September 17, after Fed policymakers reduced the central bank’s main interest rate to a range of 4% – 4.25%, the first 2025 decrease. Signs in the labor market.
Recent evidence, along with reviews of previous data, indicate a sharp slowdown in job creation, which officials are trying to evaluate. This process has been wandered by a reduction in employment supply amid enhanced immigration imposition policies by President Donald Trump.
Attention to inflation
However, Powell continued on Tuesday to argue that the Fed should remain careful in the possibility of Trump’s duties leading to persistent inflationary impacts.
He said that duties increases would probably take time to apply through supply chains, resulting in a lump sum increase in the level of prices that could be distributed in many quarters. He added that prices of goods lead to an increase in inflation.
“Incoming data and surveys suggest that these price increases greatly reflect higher duties rather than broader prices,” Powell said.
The challenge faced by FED policymakers is reflected in the wide range of opinions among officials on the best course for interest rates. In updated quarterly forecasts published after last week’s meeting, policymakers provided for two additional reductions by 25 points this year, according to average estimation.
However, many have also seen one additional or no reductions in 2025. Some policy -makers continued to support a careful approach to further interest rate cuts, as inflation remains above the 2% target of the Fed.
Others have put more emphasis on the labor market. Earlier on Tuesday, Fed Commander Michel Bowman said that officials would have to act decisively to reduce interest rates as the labor market was weakened and warned that policymakers were at risk of being behind the curve. Steven Miran, the newest member of the Fed Board of Directors, adopted an extreme view between policy -makers, demanding sharp cuts for the rest of the year.
Trump, who appointed both Bowman and Miran on the Fed Board of Directors, has put strong pressure on Powell and the Fed for a drastic reduction in interest rates. The President also dismissed the Fed Commander, Lisa Cook. This is an unprecedented step that has prepared the scene for a subsequent ruling by the Supreme Court, with an impact on the Central Bank’s ability to release monetary policy from political influences.
Powell said on Tuesday that the financial crisis of 2008-09 and the Covid -9 pandemic left marks “that will accompany us for a long time”.
“In democracies around the world, public confidence in economic and political institutions has been questioned. Those of us who are in public service right now must focus closely on the execution of our critical missions in the best possible way in the midst of stormy seas and strong side winds, ”said Powell.