Federal Reserve Chair Press Conference Highlights & Insights

There is a lot said over the course of the hour long press conference. Below is a bucketing of the comments by topic (thank you AI) from Fed Chair Powell.

Overall, what we know is the Fed Chair is cautious on inflation due to tariffs, acknowledges that employment shows some signs of weakness especially for those that lost their jobs. He acknowledges that the Fed is in a good place and can react to incoming data. He is feeling good about the economy.

Below is the review by topic.

Inflation

• “Had three months of favorable inflation readings, which was welcome news.”

• “Core services inflation has been grinding down; goods inflation is moving up a bit, expect more in summer.”

• “Can’t assume inflation will just move up and then back down as projections show.”

• “Fed expects meaningful inflation in coming months; waiting to see the size of effects.”

• “Compared to Sept 2024, inflation forecast is higher now due to tariffs.”

• “Will take confidence that inflation is coming down—without tariffs, that confidence would be building.”

• “Fed will restore 2% inflation on a durable and sustainable basis.”

• “Best thing Fed can do is deliver price stability and full employment.”

Powell acknowledged progress on inflation, with three months of favorable data and easing in core services prices. However, he emphasized that inflation may not follow a smooth path down. Goods inflation is picking up, and the Fed expects more inflation pressure, particularly from tariffs. Sustained 2% inflation remains the goal, and while policy is helping, confidence in progress is not yet sufficient.

Tariffs

• “Tariffs take time to work their way to the consumer.”

• “Starting to see tariff impacts; expects more in coming months.”

• “Many companies expect to pass some or all of tariff costs to consumers.”

• “Adapting in real-time to estimates of how high tariffs will be.”

• “Do not know where tariffs will settle out—highly uncertain.”

• “Cost of tariffs has to be paid, some will fall on consumers.”

• “Hard to know how Fed should react until they see size of tariff effects.”

• “Tariffs contribute to higher near-term inflation forecast.”

Tariffs are a major source of uncertainty and inflation risk. Powell noted that their impact takes time to reach consumers, but signs are already emerging. Many firms intend to pass tariff costs through to consumers, and the Fed is adjusting expectations in real time. The unpredictable nature and scale of tariff effects complicate policymaking, reinforcing the need for actual data before the Fed makes decisive moves.

Labour Market / Employment

• “Can see a perhaps slow, continued cooling in labor market, but nothing troubling.”

• “No evidence of increased slack except at the margin.”

• “Very few people are being laid off, but those out of the workforce are struggling to return.”

• “Labour market is not crying out for a rate cut.”

• “Supply and demand have kept unemployment at a reasonable level (4.2%).”

• “US economy has defied many forecasts of weakening.”

The labor market is gradually cooling, but not in a way that alarms the Fed. Powell sees no major slack, with unemployment remaining low and layoffs minimal. However, some people who left the workforce are finding it hard to return. The Fed does not see the labor market as weak enough to justify rate cuts, and overall, it remains a pillar of strength for the economy.

Policy / Rate Outlook

• “Appropriate to hold where we are; policy is in a good place.”

• “Rate path depends on data; no one holds rate paths with strong conviction.”

• “Divergence in dot plot reflects different economic forecasts.”

• “At some point, rate cuts will be appropriate.”

• “Projections are divergent, but there was strong support for today’s decision.”

• “Waiting a couple of months may lead to smarter policy decisions.”

• “Not saying rate hikes are the base case; lack of high conviction on rate path.”

• “Policy is modestly restrictive, not very restrictive.”

• “Must be forward-looking; need to see actual data before acting.”

Powell made it clear that policy is currently “in a good place,” and that further moves will be highly data-dependent. Divergent views on rate paths reflect different economic forecasts, not disagreement on principles. While no one has strong conviction on the precise path ahead, there is a shared view that rate cuts may eventually be appropriate—once inflation and labor market data support it. The Fed is purposefully patient and prefers to wait for clearer signals.

Economic Growth / Resilience

• “Economy has been resilient—partly due to the Fed’s stance.”

• “Feels more positive than three months ago.”

• “US economy continues to surprise forecasters.”

The US economy continues to outperform forecasts, thanks in part to the Fed’s stance. Powell said recent resilience has surprised many and supports the decision to hold steady for now. Business sentiment has improved from three months ago, adding to optimism around the outlook.

Sentiment / Uncertainty

• “Sentiment has improved from very low levels, though still depressed.”

• “Uncertainty peaked in April and has come down since.”

• “Uncertainty reduction is reflected in the statement language adjustment.”

• “The time will come when we have more confidence; cannot say exactly when.”

Sentiment has rebounded from very low levels, and overall economic uncertainty—after peaking in April—has begun to ease. Powell indicated that this change in tone is reflected in the language of the FOMC statement. Still, the Fed is awaiting more clarity before shifting policy meaningfully.

Data Reliability

• “US is a leader in measuring the economy—hates to see data quality diminish.”

• “Having reliable data is a huge public good, helps businesses and policymakers.”

• “Not concerned the Fed can’t do its job with current data, but good data is essential.”

Powell stressed the importance of high-quality economic data, calling it a public good that supports both Fed policy and business planning. While the Fed can function with current data, he warned against complacency, emphasizing the long-term value of maintaining America’s global leadership in economic measurement.

Other Topics

• Housing: “Housing situation is a longer-run problem.”

• Trump Criticism & Policy: “We did not talk about Trump’s bill; it’s still evolving.”

• “Not saying Americans should expect pain in H2 2025.”

Powell briefly touched on long-run challenges in the housing market and distanced the Fed from ongoing political discussions, including President Trump’s evolving “bill.” He rejected the idea that Americans should expect hardship later this year, though acknowledged the economy still faces risks.