📢 Jerome Powell Signals a Key Turning Point in U.S. Monetary Policy

Federal Reserve Chair Jerome Powell’s latest address marks a defining moment for U.S. monetary policy — as the Fed seeks to balance economic growth, employment, and inflation control amid evolving conditions.

Economic Outlook & Policy Direction

Powell noted that the U.S. economy has shown unexpected resilience, but the labor market remains sluggish, with limited hiring and low turnover. This lack of momentum highlights underlying weaknesses, increasing the likelihood of additional interest rate cuts aimed at reviving growth.

Even amid a federal data blackout caused by the government shutdown, Powell reaffirmed the Fed’s “data-dependent, meeting-by-meeting” approach to decision-making.

Quantitative Tightening Nears Its End

The Fed’s balance sheet has shrunk from its pandemic high of $9 trillion to roughly $6.6 trillion. Powell hinted that the quantitative tightening (QT) phase may be approaching completion as liquidity pressures surface — evident in rising repo rates and strained money markets. The Fed remains cautious to ensure these signals don’t evolve into broader market instability.

Defending the Fed’s Tools

Facing political criticism, Powell stood firm on the Fed’s use of its core policy instruments — notably interest payments on reserves. He cautioned that removing such tools would weaken the Fed’s rate control, risking economic volatility and compromising its dual mandate of price stability and maximum employment.

Market Outlook & Rate Expectations

Traders widely expect a 25 basis point rate cut at the upcoming FOMC meeting (Oct 28–29). Powell’s tone suggested that the Fed remains ready to ease further if needed, striving to support growth while keeping inflation in check.

💬 Bottom Line:

Powell’s remarks reinforce the Fed’s balanced and adaptive stance — one that prioritizes stability, flexibility, and long-term economic health in a time of uncertainty.