A change in the nation’s interest rates is not necessarily needed in response to the Trump administration’s controversial tariff policies, Federal Reserve Chairman Jerome Powell has declared.
Speaking before the Economic Club of Chicago, Powell appeared a calming presence as he remarked: “For the time being, we are well positioned to wait for greater clarity.”
Powell continued: “Despite heightened uncertainty and downside risks, the U.S. economy is still in a solid position. The labor market is at or near maximum employment. Inflation has come down a great deal but is running a bit above our 2% objective.”
For all of that, Powell acknowledged that “surveys of households and businesses report a sharp decline in sentiment and elevated uncertainty about the outlook, largely reflecting trade policy concerns.”
Looking at additional forecasts for the rest of this year, Powell said it was clear that trends were running in the direction of a “slowing, but positive growth.”
While job growth is currently less than it was in 2024, the Fed Chairman remarked, “the combination of low layoffs and lower labor force growth has kept the unemployment rate in a low and stable range.”
At the same time, the ratio of job openings to unemployed job seekers remains “near its pre-pandemic level. Wage growth has continued to moderate, while still outpacing inflation.”
“Overall,” Powell added, “the labor market appears to be in solid condition and broadly in balance and is not a significant source of inflationary pressure.”
Powell in recent months has been cautious in either raising or lowering interest rates. The Chairman’s remarks in Chicago, notes the site Investopedia, “indicated that the Fed would be reluctant to cut rates even if financial markets took a dive.”
At the same time, the New York Times suggested that Powell’s speech shows he is “concerned about the potential for President Trump’s tariffs to stoke a persistent inflation problem, something he said the Fed was obligated to ensure did not happen.”
For now, Powell told his Chicago audience, the Fed would continue to “analyze the incoming data, the evolving outlook, and the balance of risks.”
“We understand that elevated levels of unemployment or inflation can be damaging and painful for communities, families, and businesses,” Powell said in concluding his remarks. “We will continue to do everything we can to achieve our maximum-employment and price-stability goals.”
April 17, 2025
By Garry Boulard
Photo courtesy of Federal Reserve
