Federal Reserve press conference, 2025-12-10 — Chair Jerome Powell

Question (Colby Smith, New York Times): Thank you. Colby Smith with the New York Times. Today’s decision was clearly very divided. It wasn’t just the two official dissents against the cut, but there were also soft dissents from four others. And I’m just wondering if this reluctance from several people to support recent reductions suggests that there is a much higher bar for cuts in the near term, and what exactly does the Committee need to see if things are well positioned right now to support a January reduction?
Answer: Sure. So let me just say, as I mentioned—and as I’ve mentioned here before—the situation is that our two goals are a bit in tension, right? So, interestingly, everyone around the table at the FOMC agrees that inflation is too high and that we want it to come down and agrees that the labor market has softened and that there’s further risk. Everyone agrees on that. Where the difference is is, how do you weight those risks and what does your forecast look like and where do—ultimately, where do you think the bigger risk is? And, you know, it’s very unusual to have persistent tension between the two parts of the mandate. And when you do, this is what you see. And I think it’s actually what you would expect to see. And we do see it. Meanwhile, the discussions we have are as good as any we’ve had in my 14 years at the Fed. They’re very thoughtful, respectful. And you just have people who have strong views. And, you know, we come together and we reach—we reach, you know, a place where we can make a decision. We made a decision today. We had—you know, 9 out of 12 supported it. So fairly broad support. But it’s not like the normal situation where everyone agrees on the direction and what to do. It’s more—it’s more spread out. And I think that’s only inherent in the situation. In terms of what it would take, you know, we all have an outlook in terms of what’s going to come, but I think, ultimately, having cut 75 and, you know, the effects of the 75 basis points will only begin to be coming in. As I’ve said before a couple of times, we’re well positioned to wait to see how the economy evolves. We’ll just have to see. And we will get, as you know, quite a bit of data. I should mention on the data, as long as I’m talking about it, that we’re going to need to be careful in assessing particularly the household survey data. There are very technical reasons about the way data are collected in some of these measures, both in, you know, inflation and in labor—in the labor market, so that the data may be distorted. And not just sort of more volatile, but distorted. And that’s—and that’s really because data was not collected in October and half of November. So we’re going to get data, but we’re going to have to look at it carefully and with a somewhat skeptical eye by the time of the January meeting. Notwithstanding that, we will have a lot of the December data by the time of the January meeting. So we expect to see a lot more, but I’m just saying that the—what we get for, for example, CPI or for the, you know, household survey, we’re going to look—we’re going to look at that really carefully and understand that it may be distorted by very technical factors.

Question (Neil Irwin, Axios): Does that imply a higher—does that imply a higher neutral rate and, therefore, the policy might be a little easier than it seems?
Answer: All—you know, all things equal, yes. But all things aren’t equal. There are many, many things pushing in different directions on where the neutral rate would be. But, yes, that argument does come up.