Mr. Jerome Powell - Chairman of the FED said that this unit is not in a hurry to cut interest rates, because the US economy and the labor market are still stable, while inflation is still facing many risks.
"If the economy remains strong but inflation does not continue to fall to 2% sustainably, we can maintain a tightening policy for longer.
If the labor market suddenly weakens or inflation falls faster than expected, we will adjust policy accordingly," Mr. Powell said at the 2025 US monetary Policy Forum of Booth School of Business, University of Chicago.
Jerome Powell did not mention much about economic uncertainty or interrupted trade wars, only noting that the level of instability was still high.
"Recent indicators show that consumer spending may be slowing compared to the rapid growth rate in the second half of 2024.
At the same time, surveys of businesses and households also pointed out increased concerns about economic prospects. However, it will take time to see how these factors will affect future spending and investment," said the Fed Chairman.
The gold market has barely reacted significantly to Powell's neutral stance.
During the Q&A session, Powell admitted that tariffs on imports could increase inflation, but in his official speech, he did not highlight the risk of escalating consumer prices.
"We are closely monitoring many measures of inflation expectations, and some recent short-term indicators have been inching up. Both the market and the survey show that tariffs are an impact factor. However, in the long term, most of the indicators remain stable and in line with our 2% inflation target, Powell said.
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