Speech of Fed Chair Jerome Powell

Jerome Powell, the Chair of the Fed, comments today on the situation of the US economy. The Fed Chair points out that there is no risk-free policy path ahead, and although the labor market has weakened, prices continue to rise, and the cost of living in the US remains high.

• Public trust in economic and political institutions has been undermined; public officials must focus closely on their core missions.
• We will ensure that a one-time price increase does not turn into a persistent inflation problem.
• Tariff increases will likely result in somewhat higher inflation over the next several quarters.
• The reasonable base case is that the tariff-driven inflation effects will be relatively short-lived.
• Disinflation in services continues; most long-term inflation expectations are consistent with the 2% target.
• Goods price increases largely reflect the impact of tariffs, not broader price pressures.
• The 12-month PCE inflation was probably 2.7% in August, with core PCE at 2.3%; both figures are higher than a year ago and driven by goods prices.
• Consumer spending has slowed, and businesses say that uncertainty weighs on the outlook.
• There has been an unusual and challenging decline in both the supply and demand for workers.
• The labor market is less dynamic and somewhat softer."
• Inflation has risen and remains elevated.
• Economic growth has moderated, and risks to employment have increased.
• Long-term inflation expectations are consistent with the 2% target.
• Some asset prices are elevated relative to historical levels. Equities are fairly highly valued.
• We do not target specific levels of financial asset prices.
• This is not a period of elevated risks to financial stability.
•  Banks are well-capitalized, and households remain in good shape.
• We need to adjust our policy toward a more balanced approach.
• Ahead of the next meeting, we will closely examine labor market conditions, growth data, and inflation to assess whether policy is appropriately positioned.
• If it is not, we will adjust it accordingly.
• The focus on inflation must be moderated in favor of a more balanced approach.
• The labor market softened over the summer.
• The Beige Book pointed to moderate growth.
• I cannot say that AI is the main reason. Artificial intelligence means that some jobs will be phased out, while others will evolve