POWELL: FED STATES THAT THERE IS NO ‘RISK-FREE PATH’ FOR INFLATION AND EMPLOYMENT
Fed Chairman Jerome Powell said the central bank faces difficult choices in balancing inflation and employment and that there is no ‘risk-free path’. In his speech in Rhode Island, he touched on the following points:
🔸 Growth fell to around 1.5% in the first half of 2025 (compared to 2.5% last year).
🔸 Employment cooled: unemployment at 4.3%, average monthly employment growth of 29,000.
🔸 Inflation above target: PCE at 2.7%, core at 2.9%, largely due to tariffs.
The Fed cut rates by 25 basis points to the 4.00–4.25% range in response to increased employment risks. However, Powell warned that easing too quickly could lead to inflation risks, while keeping rates tight for too long could lead to employment risks. He emphasised that policy is entirely data-dependent.