Summary of Jerome Powell’s Speech

Today, Federal Reserve Chair Jerome Powell addressed the state of the U.S. economy and the Fed’s ongoing monetary policy approach. His speech focused on three key areas: inflation control, interest rates, and labor market resilience.

1. Inflation Remains the Top Priority:
Powell reiterated that bringing inflation down to the Fed’s long-term target of 2% remains the central goal. He acknowledged recent progress but emphasized that inflation is still too high, particularly in core services. He noted that while goods inflation has cooled, sticky service prices continue to pose a challenge.

2. Interest Rates to Stay Higher for Longer (If Needed):
Powell signaled that the Federal Reserve is prepared to hold interest rates steady or even raise them again if inflation does not show consistent improvement. He stressed that the Fed will be “data-dependent,” meaning future decisions will rely on incoming economic indicators. There is no commitment yet to begin cutting rates, despite market speculation.

3. Labor Market Still Strong, But Cooling Slightly:
The job market remains solid, with unemployment low and wage growth stabilizing. Powell acknowledged that while some softening is evident, especially in job openings and new hiring, the labor market is not collapsing. This gradual moderation is considered a healthy sign of economic rebalancing.

Closing Remarks:
Powell concluded by stating that while there are reasons for optimism, the Fed will continue to act cautiously and deliberately. He reaffirmed the Fed’s independence and commitment to long-term price stability over short-term market pressure.