📰 Powell Signals Caution as Fed Nears End of Tightening Cycle

During his October 14 remarks at the National Association for Business Economics, Federal Reserve Chair Jerome Powell painted a nuanced picture of the U.S. economy — stronger than expected, yet still facing weak labor dynamics.

Powell noted that while overall growth has held steady, hiring momentum has slowed, and layoffs remain minimal — signs that businesses are hesitant amid uncertainty. He also acknowledged that the Fed’s ongoing balance-sheet reduction could soon wind down as liquidity conditions tighten, hinting that quantitative tightening may be approaching its conclusion.

Despite inflation cooling in recent months, Powell stressed that it remains above the 2% target, requiring vigilance. He warned there is “no completely safe route” forward, emphasizing that future policy adjustments will be data-driven and deliberate, made “one meeting at a time.”

The Fed now faces a difficult balancing act: cutting rates prematurely could reignite inflation, while waiting too long risks pushing the economy into a sharper slowdown.

Market participants read Powell’s comments as mildly dovish, reinforcing expectations for a small rate cut before year-end. However, his overall tone remained steady and cautious — prioritizing stability over rapid policy shifts.

As the central bank edges closer to ending its tightening campaign, investors are asking the key question: how long can resilience last amid soft job creation and elevated borrowing costs?

Powell’s latest message was clear — the Fed will stay flexible, patient, and focused on sustainable balance, not quick wins