Today, February 11, 2025, Federal Reserve Chairman Jerome Powell delivered a report to the US Senate on the current state of the economy and the regulator's plans. His speech was expected with special attention, since the issues of inflation, interest rates and the future course of the Fed remain key for global financial markets.
Key Points from the Speech
The U.S. economy continues to grow
Powell noted that the U.S. economy remains resilient. In 2024, the country's GDP grew by 2.5%, which is above expectations. The main drivers of growth remain consumer spending and investments in technology. However, activity in the real estate sector has stabilized after a decline in the middle of last year.
Stable Labor Market
The American labor market shows signs of balance. The average monthly job gain was 189,000, and the unemployment rate held steady at 4%. Meanwhile, wage growth has slowed, which may help reduce inflationary pressure. Powell emphasized that the labor market is no longer a significant factor in price growth.
Interest Rates: No Changes for Now
The Fed Chair indicated that the regulator is in no hurry to change interest rates. He emphasized that monetary policy remains flexible, and any changes will depend on further inflation dynamics and economic data. The Fed has already lowered rates several times, but no new decisions in this direction are expected for now.
Inflation is declining but still above the target level
The Fed continues its fight against inflation. Although its level has approached the target of 2%, risks remain. Powell indicated that the central bank will remain cautious to prevent a possible new acceleration of inflation.
Conclusions: What to Expect Next?
Markets perceived Powell's speech as a signal to maintain the current course of the Fed. This means:
No changes in interest rates are expected in the coming months. The Fed will take a wait-and-see approach and analyze economic data.
The labor market and the economy as a whole are stable, giving the Fed room to maneuver.
Inflation remains in focus. If its decline slows or it starts to rise, the Fed may reconsider its policy.
Overall, Powell's speech confirmed that the Fed is acting cautiously, avoiding sharp movements. This reduces the likelihood of sharp fluctuations in the stock and cryptocurrency markets but makes the situation less predictable in the long term.