Federal Reserve Chairman Jerome Powell confirmed that the U.S. economy remains in a strong position, noting that the central bank is adopting a cautious approach in making monetary policy decisions, especially regarding the timing of interest rate cuts.
Powell added in press statements that inflation in the United States remains under control despite ignoring the effects of tariffs so far, but he also indicated that the summer of 2025 could witness a temporary increase in inflation readings.
The Chairman of the Federal Reserve indicated that the board is closely monitoring the developments in economic data, with a particular focus on inflation data in the United States and the labor market, emphasizing that any decision regarding interest rates will be made on a meeting-by-meeting basis, depending on the available data.
Although some markets anticipate a near-term rate cut, Powell stated it is uncertain whether the July meeting is too early for such a move, but he did not rule it out either.
Powell explained that the current monetary policy appears to be "moderately constrained," reflecting a cautious stance amid ongoing strength in the U.S. economy and labor market. He also pointed out that there are expectations within the board for a potential sudden weakness in the labor market, which could change the dynamics later.
Regarding trade policies and tariffs, Powell confirmed that the board has not fully integrated the effects of these tariffs into its analysis yet, stressing the need to monitor developments carefully, especially in light of recent statements from the U.S. administration regarding imposing tariffs on some trading partners.
The Federal Reserve Chairman added that most members of the board see it as appropriate to lower interest rates later this year if economic data permits, particularly concerning inflation in the United States.
