Live Updates: Powell Emphasizes Fed’s Cautious Approach to Rate Cuts, Stresses Need for More Data

Fed Chair Powell Addresses Economic Concerns

In a recent press conference, Fed Chair Jerome Powell highlighted that the U.S. federal debt is on an “unsustainable path.” However, he chose not to advise Congress on how to handle the budget, stating, “They don’t need my advice.” It’s Congress’s responsibility to navigate a sustainable course for fiscal policy.

No Influence from Trump on Rates

Powell also made it clear that President Trump’s calls for lowering interest rates would not impact the Federal Open Market Committee’s (FOMC) decisions. He emphasized that the Fed operates independently and bases its actions solely on economic data. "We’re focused on maximum employment and price stability for the American people," Powell asserted.

Waiting to See

Reflecting on economic uncertainties surrounding Trump’s tariffs, Powell feels the Fed is in a “good position” to wait and see how the situation unfolds. He noted the economy has shown resilience, making it unnecessary to rush any decisions. “The costs of waiting are fairly low,” he added.

Impact of Tariffs

Powell warned that if current tariff levels remain, they could hamper the Fed’s ability to meet its goals of stable inflation and low unemployment. He mentioned that such tariffs could raise inflation and increase unemployment. “This could delay our progress for at least the next year,” he explained, highlighting concerns over the potential long-lasting effects on the economy.

No Preemptive Cuts

Despite inflation remaining above target, Powell stated that the Fed does not plan to cut rates preemptively. “We need more data before we can make a decision,” he mentioned, pointing to the uncertain nature of current economic indicators.

Reassessing Priorities

Powell indicated that it’s still early to determine whether employment or inflation should take priority. He described the Fed’s current monetary policy as “moderately restrictive” but well-positioned to respond as necessary. “We don’t see a reason to hurry. We can be patient,” he reassured.

Recent Trends in Consumer Rates

As the Fed stands firm on interest rates, consumer borrowing costs remain high. The average credit card rate is above 20%, and auto loan rates exceed 7%. Mortgage rates have seen slight declines, showcasing the Fed’s complex impact on various sectors of the economy.

Market Reactions

Following Powell’s statements, stock prices dipped slightly as markets reacted to the heightened risk of inflation and unemployment. The S&P 500 fell by 0.4%, while broader indices showed similar trends.

The Bigger Picture

David Kelly from JPMorgan Asset Management remarked that the Fed’s stance serves as a cautionary signal to the administration. He noted, “If you read between the lines, it suggests that current policies may lead to higher inflation and unemployment.”

Conclusion: A Balancing Act

Overall, Powell’s insights reflect the delicate balance the Fed must maintain amid economic uncertainty and policy changes. As the situation evolves, careful monitoring of data will guide their next moves.

For more details on the Federal Reserve’s decisions and their implications, you can refer to authoritative sources like CNBC and Federal Reserve Economic Data.

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