Emre Yumlu 
Federal Reserve Chair Jerome Powell made headlines once again with his latest comments on the U.S. economy and inflation outlook. Powell emphasized that inflation has significantly declined, yet it still remains somewhat elevated. His remarks, delivered at a time of growing uncertainty around the Fed’s interest rate policy, drew close attention from investors and analysts alike.
Powell: “If That’s the Case, Cutting Rates Sooner May Be Appropriate.”
Powell stated that recent economic data suggests inflation could come in weaker than expected, which may justify an earlier-than-planned interest rate cut. He added that if the strength in the labor market continues, inflation could gradually move closer to the Fed’s target.
“Inflation may not be as strong as we anticipated. If that’s the case, cutting rates sooner could be appropriate.”
Powell: “No Recession in the U.S. Economy”
The Fed Chair reassured markets by stating that the U.S. economy remains strong and is not currently in a recession. This was taken as a positive signal by market participants. Powell reiterated the Fed’s commitment to its 2% inflation target and emphasized the need to stay focused on the long-term path.
Tariffs and Inflation: A Complex Relationship
Powell also addressed the issue of U.S. tariffs, noting they could place upward pressure on inflation. However, he clarified that the Fed’s role is not to comment directly on tariff policies, but to monitor how such external factors affect inflation and employment, which are core to its mandate.
“The Fed’s job is not about the tariffs themselves, but about how they influence inflation and the labor market.”
Middle East Impact Still Unclear
When asked about the possible economic implications of geopolitical tensions in the Middle East, Powell responded that it is still too early to assess the full impact. He indicated that further developments would be required to understand any potential influence on Fed policy decisions.
Could Rate Cuts Be Delayed Until Late 2025?
According to Powell, a significant portion of Fed policymakers believe that interest rate cuts could be appropriate toward the end of 2025. However, the final decision will depend heavily on upcoming inflation and labor market data. The Fed maintains a data-dependent approach, meaning its next move will be shaped by incoming economic signals.
You can share your opinions in the comments about the topic. Also, follow us on Telegram, Twitter, and YouTube for more content like this.