Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
S&P 500 Retreats From Record High as AI Stocks Slide, Retail Sales Disappoint 
BOJ Seen Holding Rates at 1% While Keeping Inflation Risk Warning 
US Dollar Slips as Weak Retail Sales Reduce Fed Rate Hike Bets 
Asian Currencies Edge Higher as Soft US Inflation Weighs on Dollar 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Strait of Hormuz Shipping Near Standstill After New Vessel Attacks 
BOJ Holds Rates at 1% as Inflation Outlook Eases, October Rate Hike Still Possible 
Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
RBA Signals More Rate Hikes Possible as Australia Battles Stubborn Inflation 
Asian Currencies Steady Ahead of US CPI as Oil Prices Rise 
Gold Prices Retreat From Two-Month High as Softer Inflation Eases Fed Rate Hike Bets 
Trump Imposes New Tariffs on Drone Imports Over US Security Concerns 
Add as a preferred source on Google
Federal Reserve Chair Jerome Powell cautioned Tuesday that the U.S. economy faces a delicate balancing act with “no risk-free path” as the central bank works to control inflation while supporting jobs. Speaking at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon in Rhode Island, Powell noted that growth has moderated, with GDP expanding at about 1.5% in the first half of the year, compared to 2.5% last year.
The labor market, once a pillar of economic strength, has shown clear signs of cooling. Powell described a “marked slowing in both the supply of and demand for workers,” an unusual development that has pushed the unemployment rate up to 4.3% in August. Payroll growth has also weakened, averaging just 29,000 new jobs per month over the past quarter, signaling rising risks to employment.
Inflation, meanwhile, remains above the Federal Reserve’s 2% target. Total personal consumption expenditures (PCE) prices rose 2.7% year-over-year in August, compared to 2.3% a year earlier. Core PCE, which excludes food and energy, climbed 2.9%. Powell attributed much of the recent uptick to higher tariffs rather than broader inflationary pressures, adding that these effects should be temporary as prices adjust over several quarters.
Acknowledging the shifting risks, the Fed recently cut the benchmark federal funds rate by 25 basis points to a range of 4% to 4.25%. Powell explained that downside risks to employment outweighed inflation concerns, though he stressed the Fed must act carefully. “If we ease too aggressively, we could leave the inflation job unfinished. If we maintain restrictive policy too long, the labor market could soften unnecessarily,” he said.
Powell emphasized that monetary policy remains flexible, with no “preset course,” and reiterated the Fed’s commitment to maximum employment and price stability. His comments highlight the central bank’s challenge of navigating a slowing economy while ensuring inflation returns sustainably to its 2% target.
