Wait-and-see Methodology Data-Driven Approach./
Powell emphasized that the United States follows a data-driven policy and that any decision to raise or lower interest rates will be based on developments in inflation and the labor market.
Independence from Political Pressures/
He confirmed that the Fed is unaffected by political pressures, including calls from President Trump for an immediate rate cut.
Impact of Tariffs and Geopolitical Tensions/
He noted the risk of inflation and economic opportunities being affected by current tariff waves, especially after the rise in global uncertainty (such as the conflict between Israel and Iran), and they are still closely monitoring these developments.
Labor Market and Inflation/
He mentioned that the labor market remains strong despite the 'clear' slowdown, and unemployment rates are still low, which supports the Fed's ability to act calmly.
He noted that inflation has exceeded the 2% target but is below the triggers that would warrant a swift move.
Future Projections Dot Plot/
He indicated that the Fed's forecasts suggest two potential cuts of about 50 basis points by the end of 2025, with the possibility of starting implementation in September, provided that the slowdown in growth and the decline in inflation towards the specified target continue.
You can describe Powell's speech as cautious and balanced, with no rush to cut rates, but he opened the door for light moves by the end of the year, contingent on having the right data. The Fed is committed to independence and closely monitors external factors such as inflation, the labor market, and trade and geopolitical tensions before taking any monetary steps.
