Federal Reserve Chair Jerome Powell delivered a cautious message to Congress on Tuesday, signaling that the central bank is in no rush to change its policy stance as it navigates a complex economic backdrop.
In his prepared remarks for the Semiannual Monetary Policy Report to Congress, Powell reiterated the Fed’s commitment to data dependence, emphasizing the need for patience amid both waning inflationary pressures and rising tariff-related uncertainty.
U.S. Economy in “Solid Position”
Powell said the U.S. economy remains “solid”, underpinned by a resilient labor market. The unemployment rate stood at 4.2% in May, and job gains, while slower than in 2022, are consistent with a balanced labor market.
The U.S. Economic Calendar API can be used to track key indicators such as:
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Monthly non-farm payrolls
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Unemployment rate
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Average hourly earnings
These labor trends will be essential in evaluating whether the Fed can proceed with rate cuts in the second half of 2025.
Inflation Cooling, but Not Enough Yet
The Fed Chair acknowledged that inflation has “eased significantly” from its 2022 peaks. For context:
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Headline PCE inflation rose 2.3% year-over-year in May.
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Core PCE, which excludes food and energy, was up 2.6%.
These metrics still exceed the Fed’s 2% target, although progress is clear.
To monitor this data directly, refer to the Inflation Indicators via Economic Calendar.
Tariffs a New Wildcard
Powell warned that recent tariffs could disrupt inflation progress, noting that:
“They could push up prices and weigh on economic activity… potentially causing a one-time price shift.”
Although he doesn’t anticipate sustained inflation from tariffs, short-term inflation expectations have increased.
This poses a risk to rate cut timelines—especially as two Fed governors have recently voiced support for a possible July rate cut, provided inflation doesn’t re-accelerate.
What This Means for Markets
Rate Outlook:
The federal funds rate remains at 4.25%–4.5%, with Powell stating:
“We are well-positioned to wait to learn more about the likely course of the economy.”
The Fed Funds Rate Tracker in the Economics API offers insight into:
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Implied probabilities of future cuts
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Market reactions to Fed commentary
Equity & Bond Markets:
Stock indices have been rallying on hopes of near-term policy easing. Treasury yields, however, are fluctuating amid mixed signals.
You can use:
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Market Indices API for equity movement
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[Treasury Yield Curve data (custom integratin)] for rate-sensitive market analysis
Final Take
Jerome Powell’s tone was cautious—but not hawkish. The Fed is signaling it won’t move prematurely. But inflation progress, labor market trends, and tariff impacts are now at the center of the Fed’s calculus.
What to watch next:
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June inflation data (CPI & PCE)
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July FOMC meeting commentary
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Labor market resilience in the face of elevated policy rates
As always, real-time monitoring of macro and microeconomic data via FMP’s APIs is essential for making forward-looking decisions.
