Appearing before the Senate Banking Committee Tuesday, Federal Reserve Chair Jerome Powell delivered a positive outlook on the U.S. economy while throwing cold water on hopes for interest rate cuts anytime soon.
“We’re in a pretty good place with this economy,” Powell told lawmakers. “We want to make more progress on inflation. And we think our policy rate is in a good place, and we don’t see any reason to be in a hurry to reduce it further.”
Powell said in his prepared remarks that the labor market appears to be “solid” and stable, with job gains averaging 189,000 per month over the last four months. At 4%, the unemployment rate is low, and wage growth remains positive, though “not a source of significant inflationary pressures.”
On interest rates, Powell said the central bank’s current stance, following three rate cuts in 2024, is working for now. “We know that reducing policy restraint too fast or too much could hinder progress on inflation,” he said. “At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.”
Asked if the Fed had pulled off a soft landing for the U.S. economy – in which the inflation rate falls while the labor market remains healthy – Powell said it was “not for me to say.”
Powell also avoided giving an opinion on President Trump’s decision to raise tariffs, which some economists fear will be inflationary. “It’s not the Fed’s job to make or comment on tariff policy,” he said.