Head of the US Federal Reserve, Jerome Powell, has given a remarkable speech. But the US President is unlikely to have liked it at all.
It’s likely to go down as one of the most important sentences uttered by a US Federal Reserve Chairman.
“My gut feeling is that uncertainty has increased,” said Fed Chairman Powell on Thursday night, with much laughter from the audience.
Employment at maximum
The US central bank will therefore wait until there is greater clarity about the future of the economy, said Powell, coughing heavily as he explained the Fed’s current monetary policy.
The US economy is in solid shape, even if uncertainties have increased, he emphasized.
Unemployment remains low and the labor market is close to its maximum capacity, he continued.
Wait and see
“Inflation has come down a great deal,” Powell emphasized, using almost the same words as US President Donald Trump.
However, inflation is still slightly above the Fed’s long-term expectations of two percent, said the central bank chairman, and the effects of US punitive tariffs on inflation are opaque. It is therefore better to wait and see.
The Fed is aware that the decision to leave the key interest rate at their current level of 4.25 to 4.5 percent will burden individuals, families and companies throughout the USA.
Pull-forward effects unclear
However, in the spirit of the mandate to ensure maximum employment and stable prices, it is necessary to wait and see. The Fed is also not in a hurry and can still ‘act in good time’ Powell continued.
The pull-forward effects to avoid Trump’s US punitive tariffs had had a strong impact on the global economy.
It is therefore better for the Fed’s management to wait until there is more clarity about the effects. The costs of this are quite low.
Gigantic pressure
It is therefore clear that Powell is entering the battle with Trump. The US President had hoped for a reduction in US key interest rates in order to be able to refinance his national debt more cheaply.
Just a few days ago, Saudi Arabia had increased its daily oil production so sharply that the oil price plummeted once again, which in turn caused inflation expectations to plummet.
However, the phrase about how relaxed Fed Chairman Powell is about the fight against Trump will certainly be remembered forever. Because the pressure on the US central bank is immense.
08.05.2025/kut./ena.
