Jerome Powell, Chairman of the US Federal Reserve, speaks during a press conference after the Federal Explanation of the Federal Open Market Committee of the federal government in Washington, DC, the USA on September 17, 2025.
Elizabeth Frantz | Reuters
The chairman of the Federal Reserve, Jerome Powell, said on Tuesday that the weakness on the labor market predominates concerns about stubborn inflation, which led to a decision that he attributed to reduce the most important interest rate of the central bank last week.
The first reduction of the year of the federal market committee came, since both the supply and the demand for workers decrease, at the same time, as the short -term effects of tariffs have higher inflation.
At such times, Powell said that during a speech in front of the managing directors in Providence, Rhode Island, the task of the Fed is to “reconcile both sides of our double mandate for stable prices and low unemployment.
“Short-term risks for inflation are upside down and the risks for employment according to a challenging situation,” he said. “Two -sided risks mean that there is no risk -free way.”
The conditions described in the speech described Powell agree with the stagflation in which growth slows down and inflation is high. While the current situation is far less serious than in the United States in the 1970s and early 1980s, it nevertheless presented a political challenge for the Fed.
However, Powell said that he feels comfortable with the current political path of the central bank, although he stated the possibility of additional cuts if the FOMC has to see the need to be more accommodating.
“The increasing downward risks for employment have shifted the balance of risks to achieve our goals,” he said. “This political attitude, which I still consider to be restrictive, lets us be well positioned to react to potential economic developments.”
During Powell's presentation, the shares have a turn, as he said during a question and answer time that assets are “quite highly valued”.
Watch jobs, inflation
Powell found a “clear slowdown” in terms of supply and demand on the job market. “In this less dynamic and somewhat softer job market, the downward risks for employment have increased,” he said.
In fact, the growth of wage and salary statements in the summer months slowed down dramatically, while the benchmark revisions achieved almost a million fewer jobs in the 12 months before March 2025.
At the same time, inflation has cooled down significantly in 2022, but is still considerable above the 2% goal of the FED. The publication of the freely department of the trade department is expected to indicate that the personal consumption price for annual all-items base rose by 2.7% and 2.9% with the exception of food and energy, said Powell.
In addition, there is the effects of President Donald Trump's tariffs. The president continues to negotiate with large US trading partners about the final level for the tasks, with China being pending in early November. Fed economists first consider the tariffs to be a temporary increase in prices, although this could change.
“The uncertainty over the inflation path remains high,” said Powell. “We will carefully assess and manage the risk of higher and more persistent inflation. We will ensure that this unique increase in prices will not become an ongoing inflation problem.”
Powell leads a Fed that was intensively criticized from the White House and sees an unusually wide scatter in the views between civil servants. The FOMC session ended with the participants, who were just 10: 9, whether one or two other quarterly cuts would be appropriate this year. Trump appointed Stephen Miran for a much more aggressive course, but his term as governor ends in January.
On Tuesday on Tuesday, governor Michelle Bowman warned of the dangers to move too slowly to deal with the labor market. Bowman, also a Trump representative, said: “We have a serious risk of standing behind the curve to tackle worsening labor market conditions.”
“I am concerned that the labor market could go into a precarious phase, and there is a risk that a shock could lead it to a sudden and significant deterioration,” she said.
While Powell has not made his expectations for future interest movements possible, Bowman hopes that the recent action “The first step” will be in a continuous change to a neutral interest rate level.