Fed Chair Powell Signals Possible Rate Cuts After Prices Ease
Speaking at a news conference after the Fed’s decision to keep the policy rate steady at 3.5%–3.75%, Powell explained, “the effects of tariffs flowing through goods prices peaking and then starting to come down, assuming there are no new major tariff increases that are begun.” He added, “And that’s what we expect to see over the course of this year. If we see that, that would be something that tells us that we can loosen policy.”
Powell described the US economic outlook as stronger compared to last year. “If you look at the incoming data since the last meeting, there is clear improvement in the outlook for growth,” he said. “Inflation performed about as expected, and as I mentioned, some of the labor market data came in suggesting evidence of stabilization. So it’s overall a stronger forecast, really.”
He further noted, “The US economy expanded at a solid pace last year and is coming into 2026 on a firm footing. While job gains have remained low, the unemployment rate has shown some signs of stabilization and inflation remains somewhat elevated.”
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