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Fed Chairman Jerome Powell speaks at the 2025 U.S. Monetary Policy Forum at the University of Chicago Booth School of Business in New York. Here are the highlights from Powell’s critical speech:
- The Fed is in no rush to adjust interest rates. The labor market is solid and generally balanced. Inflation is slightly above the 2% target but is gradually approaching it.
- Uncertainty about the Trump administration’s policies and their economic impact remains high. Some recent inflation expectations surveys and market indicators have shown increases due to tariffs.
- Most long-term inflation expectations remain stable and consistent with the 2% target.
- The Fed is fully prepared to wait for a clearer picture.
- The net effect of trade, immigration, fiscal and regulatory policies is the factor that has the greatest impact on economic and monetary policy.
- The Fed’s policy is not set in stone; if inflation progress stagnates, policy may remain restrictive, or if the labor market weakens unexpectedly or inflation declines unexpectedly, policy may be eased.
- Despite high uncertainty, the US economy is in good shape.
- The path to achieving the 2% inflation target will be bumpy; the Fed will not overreact to one or two economic data reports that are higher or lower than expected.
- Recent indicators point to a possible slowdown in consumer spending and increased uncertainty; it remains to be seen how these developments will impact future spending and investment.
- Fed Chair Powell reiterated that the 2% inflation target is not the focus of the Fed’s framework review; the results of the review will be released in late summer.
- U.S. short-term interest rate futures maintained their forecast that the Fed will cut interest rates in June and expect a total of three rate cuts in 2025 after Powell said the Fed did not need to rush to act.
*This is not investment advice.
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