#PowellRemarks Federal Reserve Chair Jerome Powell recently delivered remarks on the economic outlook at the Economic Club of Chicago. Here are the key points from his speech ¹:

Economic Outlook

- The US economy is in a solid position despite heightened uncertainty and downside risks.

- The labor market is at or near maximum employment, with low layoffs and stable unemployment rates.

- Inflation has eased from pandemic highs but remains above the 2% objective, with recent readings showing 2.3% growth in total PCE prices and 2.6% in core PCE prices.

Monetary Policy

- The Fed will balance maximum employment and price stability mandates.

- Tariffs are likely to generate a temporary rise in inflation, and the Fed will monitor incoming data to assess the implications for monetary policy.

- The Fed aims to keep longer-term inflation expectations well-anchored and prevent a one-time price increase from becoming an ongoing inflation problem.

Challenges Ahead

- The new Administration's policy changes, including trade, immigration, fiscal policy, and regulation, will have uncertain effects on the economy.

- The level of tariff increases announced so far is significantly larger than anticipated, which could lead to higher inflation and slower growth.

Fed's Response

- The Fed will continue to analyze incoming data and update its assessment as needed.

- For now, the economy is well-positioned to wait for greater clarity before considering any adjustments to the policy stance.