Fed Chair Powell: No Decisions Made Regarding Rate Cut in September

Federal Reserve Chair Jerome Powell held a press conference following the July policy meeting, where he elaborated on the decision to maintain the federal funds rate at 4.25%–4.50% for the fifth consecutive time. Responding to reporters’ questions, Powell noted that the U.S. economy remains in a solid position despite a slowdown in growth driven by reduced consumer spending, with the housing sector continuing to show weakness. He highlighted that inflation is slightly above the target, but most measures of longer-term inflation expectations remain consistent with the Fed’s goals.

Powell emphasized that the current modestly restrictive monetary policy positions the Federal Reserve well to respond to economic developments in a timely manner. He noted that the labor market remains near maximum employment, with low unemployment staying within a narrow range. However, he pointed out a slowdown in job creation compared to the previous year, with a balanced decline in both labor supply and demand. Powell stressed that the unemployment rate is now the key metric to monitor, with clear downside risks to the labor market.

Regarding future expectations, Powell clarified that no decisions have been made about a potential rate cut in September, stating that more information will be needed in the coming months. He explained that the policy statement reflected increased uncertainty since the June meeting, particularly amid dynamic trade negotiations and the uncertain broader impact of tariffs on goods. Powell noted that GDP and PCE figures aligned with expectations, with PCE expected to rise by 2.5% and Core PCE by 2.7% over the 12 months through June.

Powell confirmed that the Federal Reserve is on track to complete its policy review by late summer, noting that many uncertainties remain unresolved and that conditions are still far from settled. He concluded by stating that the economy does not appear to be inappropriately constrained by the current restrictive policy, but he suggested that more developments are expected in the near future.