Chair Jerome Powell Announces Fed Will Leave Rates Unchanged Despite Trump's Pressure

Forbes Breaking News

Federal Reserve Chairman Jerome Powell spoke about the Federal Reserve's decision to maintain interest rates, despite President Donald Trump's calls for lower rates.

Transcript

00:00Good afternoon. My colleagues and I remain squarely focused on achieving our dual mandate

00:08goals of maximum employment and stable prices for the benefit of the American people. Despite

00:15elevated uncertainty, the economy is in a solid position. The unemployment rate remains low,

00:21and the labor market is at or near maximum employment. Inflation has been running somewhat

00:26above our 2 percent longer-run objective. In support of our goals, today the Federal Open

00:33Market Committee decided to leave our policy interest rate unchanged. We believe that the

00:38current stance of monetary policy leaves us well-positioned to respond in a timely way

00:43to potential economic developments. I will have more to say about monetary policy after

00:49briefly reviewing economic developments. Recent indicators suggest that growth of economic

00:55activity has moderated. GDP rose at a 1.2 percent pace in the first half of this year, down

01:02from 2.5 percent last year. Although the increase in the second quarter was stronger at 3 percent,

01:09focusing on the first half of the year helps smooth through the volatility in the quarterly

01:14figures related to the unusual swings in net exports. The moderation in growth largely reflects

01:21a slowdown in consumer spending. In contrast, business investment in equipment and intangibles

01:27picked up from last year's pace. Activity in the housing sector remains weak.

01:33In the labor market, conditions have remained solid. Payroll job gains averaged 150,000 per

01:39month over the past three months. The unemployment rate at 4.1 percent remains low and has stayed

01:45in a narrow range over the past year. Wage growth has continued to moderate while

01:51still outpacing inflation. Overall, a wide set of indicators suggests that conditions

01:57in the labor market are broadly in balance and consistent with maximum employment.

02:04Inflation has eased significantly from its highs in mid-2022 but remains somewhat elevated relative

02:10to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and other

02:15data indicate that total PCE prices rose 2.5 percent over the 12 months ending in June

02:22and that, excluding the volatile food and energy categories, core PCE prices rose 2.7 percent.

02:30These readings are little changed from the beginning of the year, although the underlying composition

02:34of price changes has shifted. Services inflation has continued to ease, while increased

02:40tariffs are pushing up prices in some categories of goods. Near-term measures of inflation expectations

02:46have moved up on balance over the course of this year on news about tariffs, as reflected

02:51in both market-based and survey-based measures. Beyond the next year or so, however, most measures

02:58of longer-term expectations remain consistent with our 2 percent inflation goal. Our monetary policy

03:06actions are guided by our dual mandate to promote maximum employment and stable prices for the

03:11American people. At today's meeting, the Committee decided to maintain the target range

03:16for the federal funds rate at 4.25 to 4.5 percent and to continue reducing the size of our balance sheet.

03:24We will continue to determine the appropriate stance of monetary policy based on the incoming data,

03:29the evolving outlook, and the balance of risks.

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