Fed's Powell Strikes Middle Path on Inflation, Jobs, as Others Take Sides

• Fed Chair Jerome Powell emphasised the need to carefully weigh the risks of stubborn inflation against signs of a weakening labour market. He stressed that policy is “not on a preset course,” with rate decisions depending on incoming data.
• Vice Chair Michelle Bowman argued for faster, proactive cuts to protect the labour market, warning it is easier to support jobs now than to repair them later. In contrast, regional Fed presidents, including Austan Goolsbee, urged caution, given inflation remains above target.
• Powell acknowledged softening conditions, with job growth averaging just 25,000 over the past three months, below breakeven, but noted other indicators remain broadly stable. Unemployment sits at 4.3%, near full employment, though momentum is slowing.
• Inflation remains nearly a point above target, worsened by tariffs that lifted goods prices. Powell warned against easing too aggressively, which could reignite inflation, but also against keeping rates high for too long, which could needlessly damage the labour market.
• Powell’s remarks come amid Trump administration pressure to cut rates, including challenges to Fed independence. He defended past emergency interventions during crises, noting they likely prevented deeper economic damage, and stressed the importance of preserving public trust as his term nears its May end.

(Source: Reuters)